New Delhi, Oct. 1 -- India's resilience to external shocks is being tested by a tougher global fight for capital, with "unsettled" trade ties with the US, the investment boom around artificial intelligence (AI) and a manufacturing push in the developed economies threatening to weigh on inflows, the finance ministry said in its monthly economic review on Thursday.

Like other developing economies, the country faces a "stiff challenge" in drawing capital flows amid external turmoil, while the rupee continues to see pressure in the short-term. The economy has shown it can absorb shocks, the ministry said, but the country cannot afford to lower its guard or rest on its post-pandemic growth laurels.

Economic growth, therefore, has to be "earn...