Finance Minister Nirmala Sitharaman on Monday pushed back against what she called "fear-mongering" about the economy, arguing that India remains resilient despite mounting pressures from the West Asia crisis.

Speaking at SIDBI's 37th Foundation Day celebrations in Mumbai, Sitharaman said the conflict in West Asia has created significant challenges for businesses, particularly micro, small and medium enterprises (MSMEs), by driving up fuel and fertiliser costs, disrupting supply chains and creating uncertainty around exports.

"The West Asia crisis is not only a diplomatic or geopolitical issue for businesses and common people. It can mean higher fuel cost, delayed cargo, costlier shipping, shortage of inputs, pressure on working capital and uncertainty in export orders," she said.

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Sitharaman said the government's immediate priority is to protect citizens, support MSMEs, safeguard exporters, keep supply chains moving and maintain economic stability.

She also defended Prime Minister Narendra Modi's appeal to conserve foreign exchange, saying it must be viewed in the context of surging global prices. "We need to understand the context in which the PM made this call. It is because of high international crude prices, and the high crude prices are ever-changing," she said.

The finance minister pointed to the "three Fs" that are putting pressure on India's external sector. "All these three payments will have to be in foreign exchange. There is no rupee trading there. We should please understand the context of these three Fs. Three Fs - fuel, fertiliser, and foreign exchange. And the foreign exchange is for in this context - purchase of gold," she said.

While acknowledging external challenges, Sitharaman said India's domestic economy remains strong. "We must also recognise that India's domestic economic situation remains positive and resilient even today."

The finance minister then criticised those predicting an economic downturn. "There is a section of Indians who very quickly want to decry the achievements of our own people... a pessimistic, cynical narrative is generated which is just not right."

"It's not right is one thing, but it is wrong because it is fear-mongering. India cannot afford fear-mongering. We need to give confidence to the people with our words and with our actions," she added.

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To support her argument, Sitharaman cited a series of economic indicators. "India continues with a robust economy. I'll give you data proof for it," she said. "GST revenues, which indicate economic activity, have remained strong even after rate rationalisation. Gross GST collections crossed 22 lakh crores for the year 2025-26, rising 8.3%."

She also highlighted strong demand indicators from April 2026. Domestic wholesale tractor sales rose 26%, passenger vehicle sales increased 25%, three-wheeler sales climbed 32%, and two-wheeler sales grew 28% year-on-year. New business premiums of life insurers rose 39%, she said.

Sitharaman said the banking sector remains healthy, noting that the gross non-performing asset ratio of public sector banks declined to 1.93% in 2025-26. Credit growth remained broad-based, with retail loans growing 18.1%, agriculture credit 15.5% and MSME lending 18.2%, she added.

The finance minister also pointed to improving corporate performance and rising private-sector investment.

"Corporate India's fourth quarter profit margin scaled to the highest level in 5 years," she said, citing industry data.

Referring to figures from the Confederation of Indian Industry (CII), Sitharaman said private-sector capital expenditure grew 67% year-on-year in September 2025. "Private sector investments are coming forward. Infrastructure activity remains steady across the country," she said.

Sitharaman said the government's policy response remains "very calibrated" and is focused on cushioning citizens and businesses from external shocks while preserving India's growth momentum.

Published on: May 25, 2026 5:43 PM IST