RBI Deputy Governor says India?s economic growth has rested more on domestic sources lately
Poonam Gupta, Deputy Governor, Reserve Bank of India has stated that the Indian economy grew by 7.8 per cent in 2025-26. Dynamism is on display this year too, when growth in the first quarter of 2026-27 (April–June 2026), after the conflict in West Asia broke out, was registered at 7.8 per cent, and was higher than expected. Growth was driven mainly by private consumption and fixed investment, with the latter growing by 11.9 per cent, its highest in the new GDP series.7 Exports of goods and services grew by 12.0 per cent in real terms, as merchandise exports picked up and services exports stayed strong. On the supply side, manufacturing grew by 9.2 per cent and services by 9.7 per cent. Growth is not just high but balanced as well.
The economic momentum seems to have carried into July–September. Gross goods and services tax (GST) collections rose by more than 14 per cent in each month of the quarter. Industrial output was up 8.0 per cent in August. Merchandise exports have grown at double-digit rates for six months running, by 23.0 per cent in September. Both the manufacturing and the services Purchasing Managers’ Indices (PMIs) were above 55 in September. Bank credit grew by 19.4 per cent year on year as on September 30.
She noted that over the past year and a half, India has been subjected to almost all the recent shocks yet the economy has withstood them well. According to her, four factors explain this. First, India is a large and diversified economy, with a vast domestic market. Its growth is spatially broad-based, diversified and underpinned by rising productivity, and it draws on domestic consumption as well as exports. Second, India’s policy frameworks have improved, and so has their implementation, with a firm focus on macroeconomic and financial stability. Third, due to conscious policy actions, the economy has become less sensitive to some of the shocks that used to hurt it in the past. Fourth is the manner in which the shocks have been managed: with policy certainty, deeper engagement with stakeholders, clearer communication and timely action.
India is the fastest-growing large economy, and its growth projection has been revised up over the past year. That growth has rested more on domestic sources lately, particularly private consumption and public investment, but new drivers have emerged, including private investment and merchandise exports. The ballpark estimate that most agencies have for the next few years is 7 per cent or thereabouts. With some of the conditions normalising, and with continued policy attention, one could envisage growth moving up from 7 per cent towards 8 per cent.
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