In a challenging global environment marked by rising inflation, volatile markets, and geopolitical uncertainties, the Indian economy is navigating smoothly, according to Reserve Bank of India (RBI) Governor Shaktikanta Das. Speaking at a CNBC TV18 event on Thursday, Das highlighted that the Indian economy remains resilient, driven by its strong macroeconomic fundamentals, a stable financial system, and a robust external sector.
India’s macroeconomic strength has been a crucial factor in maintaining stability amid external challenges. The country has seen growth in key economic indicators, even as global inflationary pressures and supply chain disruptions continue to affect major economies. Das emphasized that the foundations of India’s economy remain strong, providing a buffer to absorb external shocks. He noted that despite global uncertainties, the Indian economy is not only surviving but thriving, thanks to a combination of sound economic policies and structural reforms.
The Governor’s remarks came amid a period of heightened inflation. In October, India’s Consumer Price Index (CPI) surged to a 14-month high of 6.21%, compared to 5.5% in September. While this uptick in inflation has raised concerns, Das pointed out that the country’s financial system remains stable and well-equipped to handle inflationary pressures. The RBI has taken a series of measures to ensure price stability, including adjusting interest rates and enhancing liquidity management to ensure that inflation does not get out of hand.
The resilience of India’s financial system has been another key pillar in maintaining economic stability. Das noted that the country’s banking sector continues to show strength, with improved asset quality and adequate capital buffers. The RBI’s regulatory measures, including reforms to ensure the soundness of the financial system, have contributed significantly to this stability. In particular, the recovery of non-performing assets (NPAs) and the stabilization of credit markets have helped maintain confidence in the financial sector.
India’s external sector has also been a source of strength. Despite global headwinds, including rising energy prices and supply chain disruptions, India’s export performance has remained strong. The country has managed to maintain a healthy trade balance, supported by sectors such as pharmaceuticals, textiles, and information technology. Das credited the country’s resilient export sector for cushioning the economy against external shocks and contributing to India’s overall economic stability.
Looking ahead, the RBI Governor expressed optimism about India’s growth trajectory. He highlighted that while challenges exist, the country’s economic fundamentals position it well for the future. He stressed that India’s demographic dividend, growing middle class, and ongoing reforms are key drivers of long-term growth. The government’s focus on infrastructure development, digitalization, and energy transition will play a pivotal role in ensuring sustained economic growth.
Das also acknowledged that the global economy continues to face risks, including the threat of a slowdown in major economies and geopolitical tensions. However, he remained confident that India’s economic resilience, backed by strong institutions and sound policies, would enable the country to weather these challenges and continue its growth path.
In his speech, Das also touched upon the importance of maintaining fiscal discipline and ensuring sustainable economic growth. He emphasized the need for continued focus on structural reforms and improving the ease of doing business, which would support India’s efforts to become a more attractive destination for foreign investment.
As the Indian economy faces global challenges, the RBI remains focused on managing inflation, ensuring financial stability, and supporting sustainable growth. Governor Shaktikanta Das’s message underlined the importance of these macroeconomic buffers in shielding the economy from external risks while charting a course for continued growth and prosperity. With the country’s strong economic foundations and resilience, India is well-placed to continue on its growth trajectory, even amid global uncertainties.
Das further highlighted that India’s economic policies have evolved over time, with a particular emphasis on resilience. He stressed that the government’s focus on structural reforms, including the Goods and Services Tax (GST) implementation, digitization, and financial inclusion, has laid the groundwork for long-term sustainable growth. By embracing technology and innovation, India has been able to enhance its productivity, increase economic efficiency, and improve its global competitiveness.
The RBI Governor also pointed out that India’s focus on renewable energy and green finance is critical for future economic growth. With the global shift towards cleaner energy, India is positioned to benefit from its commitment to reducing carbon emissions and increasing investments in solar and wind energy. The transition to a greener economy presents opportunities for India to attract foreign investment, create jobs, and foster innovation in sustainable industries.
Another important aspect of India’s growth story, according to Das, is its demographic advantage. With a large young population, India has the potential to become a global leader in terms of human capital. This demographic dividend can fuel economic growth, provided the country continues to focus on education, skill development, and job creation. The government’s initiatives to improve access to quality education and provide vocational training are critical to ensuring that India’s workforce remains competitive in a rapidly evolving global economy.
Das also addressed the importance of strengthening India’s banking and financial systems to support the economy’s growth trajectory. He emphasized that financial inclusion remains a priority for the government and the RBI, which has made significant progress in extending banking services to underserved populations, especially in rural areas. This, he said, would help foster entrepreneurship, enhance access to capital for small businesses, and provide a foundation for inclusive economic growth.
As India’s economy continues to grow, there are also challenges to address, including income inequality and regional disparities. Das acknowledged that while the economy is performing well on aggregate, there remains a need for policies that promote equitable growth across all sections of society. Ensuring that the benefits of India’s economic growth reach all its citizens will be essential for maintaining social stability and creating a more inclusive future.
On the global front, while the RBI remains cautious about international developments, Das reiterated that India’s economic stability is supported by its large domestic market, diversified export base, and strong institutional framework. The country’s ability to adapt and thrive amid global uncertainties has earned it a reputation as one of the world’s most resilient economies. As a result, India is poised to continue attracting foreign investment, both in traditional sectors and emerging industries like digital technology, artificial intelligence, and green energy.