India’s resilience to global shocks built on broad reforms: Shaktikanta Das

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

Speaking at the Kautilya Economic Conclave, Das said that reforms such as flexible inflation targeting, the goods and services tax, digital payments and banking sector reforms were not designed as one-off measures but as buffers that allow the economy to absorb disruptions and recover rapidly.

“India’s resilience is not accidental. It is the outcome of broad and mutually reinforcing reforms,” said Das, who served as the 25th governor of the Reserve Bank of India for six years until December 2024.

Das also stressed that India’s strategy is no longer simply to grow rapidly, but to grow sustainably and resiliently over the long term.

Das's remarks resonate with the 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 that the country’s policy focus on fiscal consolidation and sustainable debt should also be viewed against the backdrop of high public debt in many advanced economies, where debt levels average close to 110% of GDP. Such high debt levels are contributing to rising bond yields and limiting the fiscal space available to deal with future shocks, he said.

Despite a difficult global environment marked by wars, geopolitical fragmentation, unilateralism, technological restrictions, energy price volatility and rising inflation, India's real GDP grew 7.8% in the first quarter of the current financial year, Das said. He added that average annual GDP growth during 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 three broad pillars behind India's economic resilience.

On governance, he highlighted improvements in public infrastructure, sanitation, financial inclusion, housing, electrification, digital services and welfare delivery. These measures, he said, have strengthened citizen-state engagement and confidence in institutions.

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 welfare schemes, with estimated savings of around ₹5.1 trillion, Das 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 that the flexible inflation-targeting framework adopted in 2016 helped India navigate successive shocks, including the pandemic and the war in Ukraine. He also pointed to the government’s roadmap to reduce the government debt-to-GDP ratio to 50% by March 2031.

The goods and services tax (GST), introduced in 2017, created an integrated national market, reduced the cascading effect of taxes, expanded the tax base and improved compliance and formalisation, Das said.

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

India’s external sector has also remained broadly resilient, supported by export diversification, free-trade agreements, a sustained surplus in services trade and steady remittance inflows. The current account deficit in FY2025-26 stood at 0.6% of GDP.

The third pillar is investment in long-term productive capacity, including infrastructure and logistics, energy and manufacturing.

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

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

On manufacturing, Das said that production-linked incentive schemes, PM MITRA and Skill India were helping strengthen the manufacturing ecosystem. India has emerged as the world’s second-largest mobile phone manufacturer, while semiconductor manufacturing has also begun gaining ground, he said.

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

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

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

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

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