RBI deputy governor Poonam Gupta says structural reforms and stronger domestic foundations have kept India growing above 7% despite global headwinds.
Reserve Bank of India deputy governor Poonam Gupta said India’s economy would probably have expanded by more than 8 per cent had it not been for a series of external shocks over the past three years, arguing that the country has still managed to grow at above 7 per cent despite an unfavourable global backdrop. Speaking at the annual Business Standard BFSI Insight Summit, Gupta said the economy had built enough structural strength over time that, under more normal global conditions, it would already be operating as an 8 per cent growth economy.
Gupta said the gains from the 1991 reforms, better systems, a digital public infrastructure and a larger role for states in development have all helped improve India’s resilience. She added that if global conditions improve, another 50 basis points to 1 percentage point could be added to growth fairly quickly. Her remarks reflect a broader view within policy circles that India’s domestic momentum remains solid even as the external environment continues to weigh on trade, finance and energy costs.
She also pointed to fuel and external financing as the main near-term constraints, while sounding relatively more comfortable about food supplies despite the impact of El Niño. Gupta said food was not a major problem and suggested India was moving closer to being an exporter in some agricultural categories. On fiscal policy, she said targeted support can help cushion supply shocks, but only if it remains consistent with fiscal discipline and wider macroeconomic stability. Gupta also argued that India’s economy has become less vulnerable to shocks such as oil-price swings and weak rainfall because of repeated policy adaptation, while dismissing concerns that artificial intelligence will cause large-scale job losses. On public debt, she said the gap between borrowing costs and nominal GDP growth points to a gradual decline in the debt-to-GDP ratio over time, assuming current trends continue.
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