Indian economy has done exceptionally well despite multiple shocks, says RBI Deputy Governor

Poonam Gupta, Deputy Governor, Reserve Bank of India has stated that India has perhaps been among the most challenged emerging market economies over past year and a half. Whereas most other countries were subject to only a subset of these shocks, India has been subjected to each one of these shocks –simultaneously and cumulatively. On trade, it had faced among the highest tariffs rates the US had imposed on any partner country and an acute policy uncertainty. As a large net oil importer, it has been particularly exposed to the oil supply disruptions and price shocks. Agriculture being a significant part of the economy, and sensitive to rainfall, El Niño is somewhat of a risk to the sector this year. Unlike in many other countries, AI has not yet been a boon. However, she noted that the economy has emerged from these shocks largely unscathed and its strength is manifested in India’s growth being the highest among peers, inflation anchored, fiscal outcome on a consolidation path and a financial sector that is more resilient than ever.

Gupta highlighted that all in all, the Indian economy has done exceptionally well, notwithstanding the multiple shocks it has faced. It is advancing ahead on a resilient growth equilibrium of 7 percent plus, that is spatially broad-based; sectorally diversified; and underpinned by rising productivity. There does remain some disconnect between this real economy narrative and parts of the financial markets, attributable in good measure to the pull of short-term returns in competing markets. This should however correct soon, she noted. Policymakers will continue to hold the fort until then and beyond, working to secure faster and more stable growth.

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