India’s resilience to global shocks built on sweeping reforms: Shaktikanta Das | Today’s news

New Delhi: India’s resilience to global economic shocks is the result of broad, mutually reinforcing reforms undertaken in the last decade, Principal Secretary-2 to Prime Minister Narendra Modi Shaktikanta Das said on Sunday, stressing the need to maintain this reform momentum as the country works towards the Viksit Bharat 2047 goal.

Addressing the Kautilya Economic Conclave, Das said reforms like flexible inflation targeting, goods and services tax, digital payments and banking sector reforms were not designed as one-off measures but as buffers to allow the economy to absorb disturbances and recover quickly.

“India’s resilience is no accident. It is the result of large-scale and mutually reinforcing reforms,” ​​said Das, who will serve as the 25th governor of the Reserve Bank of India for six years until December 2024.

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Das also emphasized that India’s strategy is no longer just rapid growth, but long-term sustainable and resilient growth.

Das’s remarks resonate with a recent assessment by Moody’s Ratings, which raised its forecast for India’s real gross domestic product (GDP) growth in FY27 to 7% from 6%, citing the economy’s resilience to external shocks, stronger domestic demand and investment.

He said the country’s policy focus on fiscal consolidation and sustainable debt should also be seen against the backdrop of high public debt in many advanced economies, where debt levels average close to 110% of GDP. Such high debt levels contribute to rising bond yields and limit the fiscal space available to deal with future shocks, he said.

Despite a difficult global environment marked by wars, geopolitical fragmentation, unilateralism, technological constraints, fluctuating energy prices and rising inflation, India’s real GDP grew by 7.8% in the first quarter of the current financial year, Das said. He added that the average annual GDP growth in the five years after the pandemic, from FY2021-22 to FY2025-26, was 7.9%.

Das identified strengthening governance and state capacity, building macroeconomic stability and investing in long-term productive capacity as the three broad pillars of India’s economic resilience.

On governance, he highlighted improvements in public infrastructure, sanitation, financial inclusion, housing, electrification, digital services and social welfare delivery. According to him, these measures have strengthened the involvement of citizens and states and trust in institutions.

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India’s digital public infrastructure, including the Jan Dhan-Aadhaar-Mobile (JAM) framework, played a particularly important role during the Covid-19 pandemic by enabling rapid transfers of financial benefits, he said. Direct benefit transfers have also reduced leakages in social security systems with estimated savings of approx ₹5.1 trillion, he said.

The second pillar, macroeconomic stability, is based on five areas such as inflation control, sound government spending, tax reforms, a stable financial sector and careful management of the external sector, he added.

Das said the flexible inflation targeting framework adopted in 2016 helped India weather subsequent shocks, including the pandemic and the war in Ukraine. He also pointed to the government’s plan to reduce the ratio of government debt to GDP to 50% by March 2031.

The Goods and Services Tax (GST), introduced in 2017, has created an integrated national market, reduced the cascading effect of taxes, broadened the tax base and improved compliance and formalization, Das said.

He also described the recovery of financial sector health as a defining feature of India’s recent economic resilience. Banks’ gross non-performing assets fell to 1.68% in June 2026, while banks’ profitability improved significantly, he said.

India’s external sector also remained broadly resilient, supported by export diversification, free trade agreements, a persistent surplus in services trade and steady inflows of remittances. The current account deficit in fiscal year 2025-26 was 0.6% of GDP.

The third pillar is investments in long-term production capacity, including infrastructure and logistics, energy and production.

Highlighting initiatives like Gati Shakti, National Logistics Policy, Sagarmala, Jal Jeevan Mission and Udan, Das said they have helped improve connectivity, logistics efficiency and market integration. India’s ranking in the World Bank’s Logistics Performance Index has improved from 54 in 2014 to 38 in 2023, with the country aiming to enter the top 25 by 2030, he said.

India’s energy diversification across fossil fuels, renewables, biofuels and nuclear power has also improved its ability to withstand external energy shocks, Das said. Solar power capacity has reached 165 GW while more than 50 million households have installed rooftop solar systems under the Prime Minister’s Surya Ghar Muft Bijli Yojana, he said.

On manufacturing, Das said the manufacturing-linked incentive schemes, PM MITRA and Skill India are helping to strengthen the manufacturing ecosystem. India has become the world’s second-largest mobile phone maker, while semiconductor manufacturing has also taken off, he said.

Looking ahead, Das identified five areas that will shape India’s next phase of development: leveraging artificial intelligence, deepening the financial sector, promoting strategic self-sufficiency, pursuing sustainable development and investing in human capital.

He said AI could improve productivity, public service delivery, scientific research, healthcare and education, but India would also need to address issues related to data governance, cyber security, concentration of technological power, algorithmic bias and AI security.

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Deepening the financial sector would require greater development of corporate bond markets, pension and insurance funds, municipal finance, infrastructure finance and green and transformational finance, Das said.

Regarding self-reliance, he emphasized that Atmanirbharta should not mean isolation. Rather, it should involve building domestic capacity while remaining integrated with global markets and pursuing more free trade agreements. He identified global supply chains, strategic manufacturing, defense manufacturing and critical technologies as areas requiring greater domestic capabilities.

Das also called for greater emphasis on sustainable development through green hydrogen, electric mobility, energy efficient infrastructure, sustainable agriculture and circular economy practices.