External risks on horizon, but RBI keeps faith in local buffers

Financial stability report cautions about exchange rate volatility, trade weakness, muted FDI

- Shayan Ghosh & Subhana Shaikh

The Reserve Bank of India (RBI) is aware of near-term risks to the Indian economy from external spillovers and will continue building strong guardrails to act as a buffer against global shocks, governor Sanjay Malhotra said.

"The Indian economy and the financial system, in contrast, remain robust and resilient supported by strong growth, benign inflation, healthy balance sheets of financial and non-financial firms, sizeable buffers and prudent policy reforms," Malhotra said in the foreword to the central bank's half-yearly financial stability report.