Chief Economic Advisor (CEA) V Anantha Nageswaran on Monday said the Indian economy was on the path to recovery but said that foreign investors may remain cautious because of geopolitical challenges.Speaking at a virtual seminar organised by Swadeshi Research Institute, he said that all sectors such as agriculture, manufacturing and construction are "doing well"."The Indian economy is showing resilience and on the path to recovery. Private demand and the services sector are doing better than expected," he said. Private capital formation is taking place, while foreign direct investment (FDI) flow is keeping steady, he added.However, there are challenges and geopolitical changes because of which foreign investors are cautious, CEA Nageswaran said.Noting that India has a "well-capitalised banking sector", he said that the insolvency and bankruptcy code (IBC) has also played a big part in "improving the health of the banking system" which had high NPAs due to the financial crisis of 2008.The economy is going to see "good capital formation for good credit growth", he said.Nageswaran, an academic and former executive with Credit Suisse Group AG and Julius Baer Group, also said, "Inflation in India is now at seven per cent. But we are worried about this rate which shows the country is becoming less tolerant to it (inflation)."