India a 'Stabilising Force' in Global Economy, Can Withstand External Shocks: Sitharaman

Finance Minister Nirmala Sitharaman on Friday said the world is facing "profound imbalances" in trade and energy security, and is undergoing a structural transformation, with India standing out as a 'stabilising force' that can withstand external shocks.

Sitharaman said geopolitical conflicts are intensifying, and sanctions and tariffs are reshaping global supply chains. India must continue to remain vigilant, and there is no room for complacency, she said, speaking at Kautilya Economic Conclave 2025 here.

"Wars and strategic rivalries are redrawing the boundaries of cooperation and conflict. Alliances that once appeared solid are being tested, and new coalitions are emerging. For India, these dynamics highlight both vulnerability and resilience. Our capacity to absorb shocks is strong, while our economic leverage is evolving," she said.

She said the world is facing an era of unprecedented global uncertainty and volatility, and the task before nations is not only to manage uncertainty but to confront trade, financial and energy imbalances.

"The task before us, therefore, is not simply to manage uncertainty but to confront imbalance. We must ask ourselves: how can we build a global order where trade is fair, finance serves productive ends, energy is both affordable and sustainable, and climate action aligns with development imperatives?" the minister said, addressing a session on 'Seeking Prosperity in Turbulent Times'.

She said there is a need to work on ways for international institutions to reflect today's realities rather than yesterday's hierarchies, besides ensuring that the voices of developing nations are no longer marginalised in rule-making, and are instead amplified in shaping the future.

Further, Sitharaman said dislocations define this new global era wherein trade flows are being reshaped, alliances are being tested, investments are being rerouted along geopolitical lines, and shared commitments are being re-examined.

"Thus, what we face is not a temporary disruption but a structural transformation," Sitharaman said.

She added that the foundations of the global order are shifting as the world that emerged after the end of the Cold War, which led to the expansion of globalisation, open markets and the pursuit of multilateral cooperation, now appears to be a relic of the past.

For three decades, a contested equilibrium allowed nations to pursue prosperity through integration and interdependence. That equilibrium has inevitably been upended, and the rules of international engagement are being rewritten, she said.

The global economy is currently facing headwinds, from an increase in trade tensions, higher tariffs, heightened global policy uncertainty and the ongoing Russia-Ukraine conflict.

Sitharaman said the global economy is faced with low investment, high cost of capital, volatile energy prices, and the tension between growth, stability, and sustainability.

In this context, India's rise as a stabilising force is neither accidental nor transient; instead, it results from a powerful combination of factors, she said.

Over the past decade, Sitharaman said, the government has focused on fiscal consolidation, improving the quality of capital expenditure, and reining in inflationary pressures.

"With the steady share of consumption and investment in the overall GDP over the years, India's growth is firmly anchored in its domestic factors, which minimises the impact of external shocks on overall growth. As a result, the Indian economy is resilient and continues to grow sustainably," she said.