However, global geopolitical tensions, particularly escalating conflicts and growing geo-economic fragmentation, could pose significant risks to this outlook, the review document said.
"Their spillover effects on India could cause negative wealth effects, impacting household sentiments and altering spending intentions on durable goods," it said.
The potential for disruptions in global trade and finance stemming from unpredictable trade policies of major economies may affect India’s external sector, despite its current stability, it noted.
Domestic factors are strong, with an expected positive agricultural output, festive demand spikes and projected increases in government spending that are anticipated to spur investment activity.
Stable demand conditions are crucial, but needed monitoring, particularly as high food prices have recently led to localised inflation pressures, the ministry said.
"However, at the margin, demand conditions in the economy bear watching. Given the overall subdued inflation, barring a few food items, the real price of money may have gone up," it added.
Fibre2Fashion News Desk (DS)