Finance Ministry plays down flight of FPIs out of Indian stock markets, says country’s economic foundations are strong

Finance Minister Nirmala Sitharaman held a press conference after an interaction post Union Budget 2025-26. She stated that as far as the new regime is concerned, the newer higher incomes have transitioned into the lower. Further, rates for all of them have been brought down.

On the question of FIIs and retail investors, the finance minister held that Indian markets today are also yielding good returns and profit booking is also happening.

Also Read: Union Budget 2025 Highlights: No reduction in public spending on capital expenditure, says Finance Minister

On FII money outflow

Adding to the Finance Minister’s statement, Finance Secretary Tuhin Kanta Pandey held that it is not entirely true that FPIs are really moving from one emerging market to another. “The general thing is that when there is a bit of global uncertainty they will go back to where they came from”.

“Indian markets have held, although there would be, any demand and supply impact that would be filled. But these are the issues of temporary measures, if you really look at the Indian economy, because eventually, you know, the returns are obtained in the real sector because the financial sector cannot just be in a bubble. In real terms, the Indian economy is in a very good resonance, remains one of the fastest, in fact, the fastest large economy.”

Ajay Seth, Secretary at the Dept of Economic Affairs further added that one must also consider domestic foreign investments and global growth outlook. He held the entire prevailing paradigm to be a short-term phenomenon. Mr Seth further held that the phenomenon has been concerning many emerging market economies as well. He noted that the paradigm did not emanate from a market failure.

On the new regime

Finance Secretary Tuhin Kanta stated that the endeavour is to make the new regime so convenient and smooth that the old will not be required. However, the finance secretary held, they would want to keep the options open.

Mr. Kanta apprised that 75% of taxpayers have opted for the new regime owing to the measures taken in the past. “Considering the bonanza accorded in the budget, I am hopeful that the other will come into it,” he held. Mr Kanta further added a potential exception could entail those with high housing and rental income might prefer the older regime.

The Finance Secretary had also indicated to do away with any potential micromanagement and avoid all instances of dispute.

GST on insurance

Finance Minister Nirmala Sitharaman and Minister of State for Finance Pankaj Chaudhary told the reporters the issue is pending with the Group of Ministers (GoM) from the GST Council. Further, Mr. Chaudhary, in response to the levy of GST on petrol and diesel, held the subject is also pending with the Council.

Collapse of Cooperative Bank

Mr Seth, responding to a question about confidence in cooperative banks, he assured those who wish to open a bank account in cooperatives must note that it is in a resilient state. “Reaching conclusions about the entire sector based on one such bank is not appropriate,” he held, emphasising, “In all states, banks of varied classes and segments are doing well. This is a very well-regulated sector.”