Government committed to accelerating reforms despite global challenges: FM

Finance Minister Nirmala Sitharaman on Friday reaffirmed the government's commitment to pushing ahead with reforms to sustain India's economic growth momentum despite mounting global challenges.

Her remarks came on a day when the Reserve Bank of India (RBI) lowered its GDP growth forecast for FY27 to 6.6%, down from the 6.9% projected in April, citing elevated energy and commodity prices and persistent supply-chain disruptions stemming from the conflict in West Asia.

While acknowledging the uncertain global backdrop, Sitharaman pointed to the economy's recent performance as evidence of India's resilience and growth potential.

Strong economic performance provides cushion

"Our government, led by Hon'ble PM Shri @narendramodi, is committed to further drive the 'Reform Express' with decisive policy measures to ensure positive economic momentum amidst the global challenges," Sitharaman said in a post on X.

The finance minister's comments followed the release of economic data showing that India's real GDP is estimated to have grown by 7.7% in FY26, according to provisional estimates. Real gross value added (GVA), a key measure of economic activity, expanded by 7.9% during the fiscal year.

The economy also maintained a strong pace in the final quarter of FY26. Real GDP and real GVA are estimated to have grown by 7.8% and 7.9%, respectively, in the January-March period.

Several sectors posted double-digit growth during the year, reflecting broad-based economic expansion. These included manufacturing, trade and repair services, hotels and transport, communication and broadcasting-related services, storage, as well as financial, real estate and professional services.

Tax exemption move aimed at attracting foreign capital

In a separate measure aimed at strengthening foreign investor participation in India's debt market, the government on Friday exempted foreign portfolio investors (FPIs) from income tax on interest earnings and capital gains arising from investments in government securities.

The Centre promulgated an ordinance amending the Income Tax Act to provide the exemption on interest income and gains arising from the sale, transfer or exchange of government securities.

According to a gazette notification issued on June 5, the tax relief will be effective from April 1 and will apply to interest income and capital gains earned by FPIs on investments in government securities from that date onward.

The move is expected to enhance the appeal of Indian government bonds among global investors and support foreign capital inflows at a time when external uncertainties and geopolitical tensions continue to weigh on financial markets.