India’s Real GDP Growth Would Have Exceeded 8% Without External Shocks, Says RBI Deputy Governor Poonam Gupta

Reserve Bank Deputy Governor Poonam Gupta stated on Tuesday that India's real GDP growth would have exceeded 8 per cent over the last three years in the absence of external shocks. Delivering her remarks at the annual Business Standard BFSI Insight Summit, Gupta highlighted that India has maintained a growth rate of over 7 per cent despite operating in an inconducive global environment.

Gupta noted that if the external environment improves, it could immediately add between 50 basis points and 1 percentage point to the country's economic growth. Tracing the trajectory of growth acceleration back to the 1991 economic reforms, she credited sustained efforts toward strengthening systems, establishing digital infrastructure, and integrating states as vital growth partners.

“Just based on the strength of that work, we would have already been an 8 per cent growth economy,” Gupta said, adding that global market improvements would provide an additional boost.

Addressing the domestic economic landscape, Gupta acknowledged that driving consistent growth requires internalizing several factors, such as learning from other economies, scaling up domestic investments, and securing foreign direct investment. She identified fuel and external finance as ongoing challenges for the country, while expressing confidence regarding the food sector despite the impact of El Nino.

“Food is not a challenge; if anything, we are becoming an exporter. This year is El Nino, but even then it is managed very well,” she noted.

On macroeconomic management, Gupta stated that fiscal policy can help cushion the initial impact of supply shocks through targeted measures, provided they align with continued fiscal prudence and overall macroeconomic stability. She added that constant policy actions and economic adaptation have made the economy less sensitive to historical vulnerabilities, such as oil volume fluctuations and rainfall deficiencies. Furthermore, she observed that avoiding excessive reliance on a single economic activity stream has provided structural advantages to India.

Commenting on technological shifts, Gupta dismissed concerns regarding artificial intelligence having a negative net impact on employment, pointing out that historical technological transitions have not resulted in permanent job losses.

Regarding public finances, Gupta stated that the differential between government borrowing costs and nominal GDP growth places India in a favorable position. She noted that the debt-to-GDP ratio is projected to decline under normal business conditions.

"India's consistent economic resilience, maintaining over 7 percent growth amidst global headwinds, reflects strong domestic fundamentals, robust digital infrastructure, and strategic diversification. As noted by the RBI leadership, once external macroeconomic shocks subside, the domestic market is well-positioned for accelerated expansion. For entrepreneurs and investors in the Indian startup and business ecosystem, this stability underscores the importance of building robust, adaptable models that can leverage domestic consumption and policy-backed digital systems while navigating external financial variables." — Dr. Shishir Gupta, Founder & CEO, StartupLanes