New Delhi, October 19: Despite the Nifty 50 and Sensex declining nearly 12% in 2026, Union Minister Nirmala Sitharaman has reaffirmed that India’s growth story remains strong and resilient, she said in an interview with CNBC. Speaking on the sidelines of the annual meetings of the International Monetary Fund (IMF) and the World Bank, Sitharaman explained how an abundance of cash in the financial system and the ease in trading have helped investors pull money out of equities much more easily. The Finance Minister pointed out how excess liquidity- the high volume of ready cash circulating in the financial markets, have acted as a double-edged sword for the Indian economy.
Many ridiculed the Finance Minister, explaining how her reasoning was flawed.
“The same excess liquidity that made selling easy is also what brought foreign money in the first place,” a user named Siddharth commented on X in a thread.
Capital that can move will move somewhere else. India already isn’t the AI trade. Making it harder to leave just accelerates the decision to never come,” he explained.
As India’s growth is tied to domestic consumption and steady local retail participation from mutual funds, India’s growth is not tied to the sudden surge from AI investments, a notable risk that policymakers are monitoring closely into 2027.
While Foreign Institutional Investors (FIIs) have reduced their exposure to the markets, domestic investors have taken their place, offering a crucial shock absorber against macroeconomic challenges and shifting global monetary policies. The Ministry of Finance is aiming to balance these capital flows carefully, as they look to ensure short-term market volatility and easy trading exits do not overshadow the long term trajectory of the company’s corporate sector.
