productivity, improve public service delivery, accelerate scientific discovery, strengthen healthcare outcomes, and transform education. India's AI strategy rests on two complementary pillars. First, building sovereign AI capabilities through investments in indigenous foundation models, high-performance computing infrastructure, semiconductor development, and a robust innovation ecosystem. The AI Mission, the AI Kosha, and the India Semiconductor Mission are laying the foundations for long-term technological competitiveness. Second, India is pursuing the vision of AI for All. Initiatives such as Bhashini seek to bridge linguistic barriers, while IndiaAI FutureSkills aim to democratize access to AI capabilities. Attention is also focused on critical issues relating to concentration of technological power, data governance, cybersecurity, algorithmic bias, and AI safety.
The second major component of the way forward is deepening India's financial sector. As India's economic weight expands, the financial architecture must deepen commensurately. While India's financial ecosystem has evolved significantly, the next phase of growth will require strengthening of long-term finance and patient capital. This underscores the need to further deepen corporate bond markets, pension and insurance funds, municipal finance, innovative infrastructure financing, and a market for green and transition finance.
The third component is promoting strategic self-reliance. Now, self-reliance does not imply isolation. Rather, it stands for building stronger domestic capabilities while remaining integrated with global markets and concluding more free trade agreements. Efforts are now focused on enhancing our presence in the global supply chains, strategic manufacturing, defense production, and domestic development of critical technologies.
The fourth component is sustainable development and climate leadership. India's rise must also be environmentally sustainable. We have made notable progress in renewable energy development and climate commitments. The next phase of growth will be driven by initiatives such as the National Green Hydrogen Mission, electric mobility, energy-efficient infrastructure, sustainable agriculture, and circular economy practices.
The fifth component is investing in human capital. India has made substantial progress in expanding access to health and education. Over the last 12 years, the number of universities increased from fewer than 350 — that is, from less than 350 to nearly 1,000 — and medical colleges from less than 400 to another 850. The next stage of development will enhance emphasis on learning outcomes, healthcare delivery, preventive care, research, and workforce skills.
Let me now conclude. If we pause for a moment and reflect upon India's story of resilience and its forward-looking strategy, what comes out clearly is a resonance with Kautilya's thoughts and advocacy. As we advance towards the vision of Viksit Bharat, sustaining the reform momentum will be very critical. Kautilya had explained long time ago, and I quote: 'Which is preferable, an immediate small gain or a large gain in the future? A large gain in the future is preferable if it is like a seed...'
A very good afternoon to all of you. It is a great pleasure and honor to be here. First of all, I must confess that I am an economist from Indonesia. So I am not a student of Kautilya, but when I look at the title of the treatise, Arthashastra, it sounds very familiar to me because in the Indonesian language, 'arta' or 'harta' means wealth, and 'shastra' means literature or science. So I have read this status, this document, but my guess is it is talking about the treatise on the political economy of wealth.
And one thing that I tried to look at about one of the important messages from Kautilya, and one of the statements, stay with me: uncertainty across the world, and would perhaps, and would stifle global growth. What is likely to follow is restrictive monetary policies from central banks. Even more critical is the exceptionally high public debt levels in many advanced economies, averaging close to 110% of their GDP, and resulting in rising bond yields, lower fiscal space, and the ability of the countries to counter current and future shocks.
Despite such a global environment, India's real GDP grew by an impressive 7.8% in the first quarter of the current financial year, with strong domestic demand and investment conditions. This quarterly growth has come on top of 7.9% average annual GDP growth recorded during the post-COVID period of five years. That is from 2021-22 to 2025-26.
In fact, as pointed out by my former colleague in the Reserve Bank of India, Dr. Michael Debabrata Patra, who is, I am happy to note, present here, if the period from July-September 2025-26 to April-June 2026-27 is taken into account, real GDP growth in India just exceeds 8%. This resonates with my statement to the Financial Times, London, a few months ago, that India is within a striking distance of 8% growth.
Now, what are the factors behind the resilience of the Indian economy? Kautilya had emphasized that a ruler's foremost responsibility was to anticipate risk, safeguard the state against internal and external threats, and establish institutions capable of preventing and mitigating calamities. A distinguishing feature of India's development journey in the last 12 years has been the gradual creation of governance foundations before the crisis actually emerged.
Many of the reforms undertaken over the past decade were not designed as one-off measures, but as specific buffers to enable the economy to absorb disruptions and recover rapidly. I would put the flexible inflation targeting, introduction of the Goods and Services Tax, the big push for digital payments, and the banking reforms among others in this category. Thus, India's resilience is not accidental. It is the outcome of broad and mutually reinforcing reforms.
I would like to highlight three major components of this broad-based approach. First, strengthening governance and state capacity. Governments derive credibility from the outcomes of their actions. In the Arthashastra, Kautilya argues that a ruler's interests are inseparable from those of the citizens.
Over the past decade, improvements in public infrastructure, sanitation, financial inclusion, housing, household electrification, digital services, and welfare delivery have contributed to stronger citizen-state engagement. When citizens experience tangible improvements in their lives, confidence in institutions increases. This confidence becomes a critical resource for governments seeking to undertake difficult reforms.
One of the clearest examples of proactive institution building has been India's digital public infrastructure, or what is otherwise known as India's stack. The JAM Trinity, consisting of Jan Dhan bank accounts, Aadhaar, and mobile connectivity, was established well before the COVID-19 pandemic. And when the need arose, it enabled rapid transfer of financial benefits to millions of citizens affected by the COVID.
Digital governance has reduced information asymmetries, streamlined administrative processes, and enhanced accountability. Illustratively, direct benefit transfers have significantly reduced leakages in welfare programs, with estimated savings of around 5.1 lakh crore.
A significant dimension of India's recent development journey has been its success in extending the reach of governance, economic opportunity, and public services to certain regions that had long remained on the margins of growth due to left-wing extremism and terrorism. Success in overcoming these problems, which had become sticky, resonates with Kautilya's emphasis on the authority of the state to maintain law, order, and discipline.
The second major initiative for strengthening India's resilience has been building macroeconomic stability. If you recall, I pointed out that I would like to highlight three major themes as factors behind the resilience of the Indian economy. The first one I have highlighted is strengthening governance and state capacity. I move on to the second major initiative, which is building macroeconomic stability.
Now, this is built upon five distinct pillars. First, inflation targeting and monetary policy credibility. The adoption of the flexible inflation targeting framework since 2016 enabled India to navigate through the successive shocks of COVID, the war in Ukraine, and the current conflicts in West Asia. Flexible inflation targeting has provided, and in fact created, the bedrock for India's high and sustained growth.
The second component is fiscal prudence and quality of expenditure. In fiscal policy, the government has shown sustained commitment to fiscal consolidation and reduction of fiscal deficit without compromising on growth-inducing expenditure. A roadmap for reduction in government debt-to-GDP ratio to 50% by March 2031 has also been announced.
The third component of the macroeconomic — you know what I mentioned, the macroeconomic stability, which is the main theme which I mentioned — is tax reforms and market integration. The introduction of the Goods and Services Tax in 2017 created an integrated national market, removed cascading burden of taxes, expanded the tax base and compliance, and led to greater formalization of the economy.
Reforms in income tax have improved competitiveness of firms and reduced tax burdens on middle classes. The results have been telling.
The fourth component is restoration of the health and stability of the financial sector. In fact, restoration of the fine health of the financial sector, I would like to say, has been the defining feature of India's resilience in the recent years. India's financial sector has emerged as a strong pillar of economic growth, supported by reforms such as the Insolvency and Bankruptcy Code, bank recapitalization, and constructive regulatory oversight.
Gross non-performing assets have fallen sharply to 1.68% in June 2026, while bank profitability has improved significantly. And finally, prudent management of the external sector has also supported India's efforts towards macroeconomic stability.
India's external sector indicators have remained broadly resilient due to a mix of factors like the ongoing diversification of exports, conclusion of free trade agreements, sustained surplus in services trade, and steady inward remittances. Current account deficit for 2025-26 remains well within manageable levels at 1% of GDP. Other key external sector vulnerability indicators have also remained well contained.
The third major initiative — I said I will mention three major initiatives — the third major initiative is building resilience in... India's resilience is investment in long-term productive capacity. This is built upon, again, three major building blocks. First, infrastructure and logistics transformation through large-scale investment and coordinated transport planning.
The Gati Shakti — that is, the Gati Shakti — India has expanded physical and digital connectivity, logistics efficiency, and access to national services. Initiatives such as the National Logistics Policy, the Sagarmala, the Jal Jeevan Mission, and Udan exemplify a governance model that is citizen-centric and integrates planning, execution, and monitoring across sectors.
The result has been lower economic frictions, greater competitiveness, enhanced market integration, and a stronger foundation for investment-led growth. No wonder India's rank in the World Bank Logistics Performance Index improved from 54 in 2014 to 38 in 2023. India aims to enter the top 25 by 2030.
India has also developed a diverse range of energy sources from fossil fuels. And this is the second component I wanted to mention in the context of — you know, in the context of what I said — the third major initiative which contributed to enhancement of India's long-term productive capacity.
India has developed a diverse range of energy sources from fossil fuels, renewables, biofuels, and nuclear energy. City gas distribution has expanded to 700 cities, piped cooking gas has reached 1.75 crore households, and solar energy capacity has surged to 1,165 gigawatts. India has emerged as the third largest country in renewable energy capacity.
Reliability of energy supply has also improved significantly. Under the Prime Minister Surya Ghar Muft Bijli Yojana, more than 50 lakh households now have rooftop solar installations. Household power bills have been reduced to either zero, and many households have been able to generate additional income through sale of surplus power. India is now better positioned to withstand external energy shocks.
Finally, the third component is manufacturing and industrial development. Flagship schemes such as the Production Linked Incentive Scheme, the PM MITRA, and Skill India are accelerating capacity building and strengthening India's manufacturing ecosystem. We are now witnessing a manufacturing resurgence in India.
Illustratively, India has become the second largest mobile phone manufacturer globally. Semiconductors have also made a big entry into India's manufacturing space. Investments in automation, robotics, and Industry 4.0 technologies are also adding to the robustness of this system.
India now stands at a pivotal moment in its development journey. I repeat, India now stands at a pivotal moment in its development journey. A leap to Viksit Bharat 2047 is very much in the realm of realization. The journey ahead is focused on capitalizing on emerging opportunities.
I proposed to highlight five major areas where the pace of activity will get significantly enhanced in the coming years. First, harnessing the AI revolution. Artificial intelligence represents perhaps the single most transformative technological development of this century so far.
As a general-purpose technology, AI has immense potential to enhance productivity, improve public service delivery, accelerate scientific discovery, strengthen healthcare outcomes, and transform education. India's AI strategy rests on two complementary pillars. First, building sovereign AI capabilities through investments in indigenous foundation models, high-performance computing infrastructure, semiconductor development, and a robust innovation ecosystem.
The AI Mission, the AI Kosha, and the India Semiconductor Mission are laying the foundations for long-term technological competitiveness. Second, India is pursuing the vision of AI for All. Initiatives such as Bhashini seek to bridge linguistic barriers, while IndiaAI FutureSkills aim to democratize access to AI capabilities. Attention is also focused on critical issues relating to concentration of technological power, data governance, cybersecurity, algorithmic bias, and AI safety.
The second major component of the way forward is deepening India's financial sector. As India's economic weight expands, the financial architecture must deepen commensurately. While India's financial ecosystem has evolved significantly, the next phase of growth will require strengthening of long-term finance and patient capital. This underscores the need to further deepen corporate bond markets, pension and insurance funds, municipal finance, innovative infrastructure financing, and a market for green and transition finance.
The third component is promoting strategic self-reliance. Now, self-reliance does not imply isolation. Rather, it stands for building stronger domestic capabilities while remaining integrated with global markets and concluding more free trade agreements. Efforts are now focused on enhancing our presence in the global supply chains, strategic manufacturing, defense production, and domestic development of critical technologies.
The fourth component is sustainable development and climate leadership. India's rise must also be environmentally sustainable. We have made notable progress in renewable energy development and climate commitments. The next phase of growth will be driven by initiatives such as the National Green Hydrogen Mission, electric mobility, energy-efficient infrastructure, sustainable agriculture, and circular economy practices.
The fifth component is investing in human capital. India has made substantial progress in expanding access to health and education. Over the last 12 years, the number of universities increased from fewer than 350 — that is, from less than 350 to nearly 1,000 — and medical colleges from less than 400 to another 850. The next stage of development will enhance emphasis on learning outcomes, healthcare delivery, preventive care, research, and workforce skills.
Let me now conclude. If we pause for a moment and reflect upon India's story of resilience and its forward-looking strategy, what comes out clearly is a resonance with Kautilya's thoughts and advocacy. As we advance towards the vision of Viksit Bharat, sustaining the reform momentum will be very critical. Kautilya had explained long time ago, and I quote: 'Which is preferable, an immediate small gain or a large gain in the future? A large gain in the future is preferable if it is like a seed yielding fruit in the future.' On court.
India's strategy is no longer to simply grow rapidly. It is to grow sustainably and resiliently over the long term. Thank you very much. Namaskar.
Uncertainty across the world, and would perhaps, and would stifle global growth. What is likely to follow is restrictive monetary policies from central banks. Even more critical is the exceptionally high public debt levels in many advanced economies, averaging close to 110% of their GDP, and resulting in rising bond yields, lower fiscal space, and the ability of the countries to counter current and future shocks.
Despite such a global environment, India's real GDP grew by an impressive 7.8% in the first quarter of the current financial year, with strong domestic demand and investment conditions. This quarterly growth has come on top of 7.9% average annual GDP growth recorded during the post-COVID period of five years, that is from 2021-22 to 2025-26.
In fact, as pointed out by my former colleague in the Reserve Bank of India, Dr. Michael Debabrata Patra, who is, I am happy to note, present here, if the period from July-September 2025-26 to April-June 2026-27 is taken into account, real GDP growth in India just exceeds 8%. This resonates with my statement to the Financial Times, London, a few months ago, that India is within a striking distance of 8% growth.
Now, what are the factors behind the resilience of the Indian economy? Kautilya had emphasized that a ruler's foremost responsibility was to anticipate risk, safeguard the state against internal and external threats, and establish institutions capable of preventing and mitigating calamities. A distinguishing feature of India's development journey in the last 12 years has been the gradual creation of governance foundations before the crisis actually emerged.
Many of the reforms undertaken over the past decade were not designed as one-off measures, but as specific buffers to enable the economy to absorb disruptions and recover rapidly. I would put the flexible inflation targeting, introduction of the Goods and Services Tax, the big push for digital payments, and the banking reforms among others in this category. Thus, India's resilience is not accidental. It is the outcome of broad and mutually reinforcing reforms.
I would like to highlight three major components of this broad-based approach. First, strengthening governance and state capacity. Governments derive credibility from the outcomes of their actions. In the Arthashastra, Kautilya argues that a ruler's interests are inseparable from those of the citizens.
Over the past decade, improvements in public infrastructure, sanitation, financial inclusion, housing, household electrification, digital services, and welfare delivery have contributed to stronger citizen-state engagement. When citizens experience tangible improvements in their lives, confidence in institutions increases. This confidence becomes a critical resource for governments seeking to undertake difficult reforms.
One of the clearest examples of proactive institution building has been India's digital public infrastructure, or what is otherwise known as India's stack. The JAM Trinity, consisting of Jan Dhan bank accounts, Aadhaar, and mobile connectivity, was established well before the COVID-19 pandemic. And when the need arose, it enabled rapid transfer of financial benefits to millions of citizens affected by the COVID.
Digital governance has reduced information asymmetries, streamlined administrative processes, and enhanced accountability. Illustratively, direct benefit transfers have significantly reduced leakages in welfare programs, with estimated savings of around 5.1 lakh crore.
A significant dimension of India's recent development journey has been its success in extending the reach of governance, economic opportunity, and public services to certain regions that had long remained on the margins of growth due to left-wing extremism and terrorism. Success in overcoming these problems, which had become sticky, resonates with Kautilya's emphasis on the authority of the state to maintain law, order, and discipline.
The second major initiative for strengthening India's resilience has been building macroeconomic stability. If you recall, I pointed out that I would like to highlight three major themes as factors behind the resilience of the Indian economy. The first one I have highlighted is strengthening governance and state capacity. I move on to the second major initiative, which is building macroeconomic stability.
Now, this is built upon five distinct pillars. First, inflation targeting and monetary policy credibility. The adoption of the flexible inflation targeting framework since 2016 enabled India to navigate through the successive shocks of COVID, the war in Ukraine, and the current conflicts in West Asia. Flexible inflation targeting has provided, has in fact created something more to do, but in the current context, as I have very briefly, I just touched upon, the emphasis has been to build our domestic — you know, to build our domestic capacity, domestic competence in areas where we are largely import-dependent.
So where it is energy, and it is in fertilizer, and so many other areas, the government is now focusing on such areas. Apart from that, the focus of the government is also on areas, you know, to take measures and to develop, you know, long-term capacity in areas where again we are dependent on sort of imports.
Take the example of the rare earth permanent magnets. Now, last year, when there were restrictions on imports, and it was not, you know, it became a major problem because China had imposed certain restrictions for whatever reason, they know better. It was a problem for almost the whole of the world, and because almost 80 to 90% of rare earth magnet supply and in that entire ecosystem originates in China.
So, the Government of India at that time, you know, central government came out immediately thereafter with a major initiative to develop domestic capacity in, you know, in rare earth permanent magnets, because that is one critical component on which manufacture of, you know, automobiles, automobile manufacturing, electronic hardware manufacturing, and so much other manufacturing depends.
And for example, recently the government has, the cabinet has approved what is called the Samudrayaan scheme. We have, you know, earlier there was a time when for oil and petroleum exploration, oil and gas exploration, there were certain areas in our coast, in the high seas, which were described as no-go zones, for whatever reason.
Now that no-go, you know, that distinction has been removed, and we are now entering into deep water exploration to again develop domestic sources of energy, supply, gas, and oil. So I can give on, on giving many examples. I have just mentioned two illustrations.
It is basically number one to continue with the structural reforms, whatever remaining reform agenda are there, to continue with that. Number two, to develop domestic capabilities where the country is largely dependent on imports. And thirdly, to continuously focus on stability, as I have explained.
Stability consisting of fiscal, monetary, and overall macroeconomic and macro-financial stability, because that provides the bedrock that supports long-term growth. So broadly, I would say this is the, you know, this is the approach the government is taking.
Thank you. We will take two questions, but keep them very brief. The gentleman in the front. Sorry, the answer was much, much longer. Sorry for that. The gentleman in the front, followed by you, please.
It's a question for Minister Basri. You mentioned inequality more visible politically because of social networks and more, and the problem of the middle class. So we know the dynamics of this in advanced economies. It can be extremely powerful and positive, or not. Do you expect this kind of consideration to influence policy making and economic policy making in the future?
This is a very important question. I tried to look at, but the gross incidence curve for many countries. It is because in the past we just focus on the bottom 30%, right? And then the bottom 30%, the poorest, they are basically relatively well-protected because we give the social protection, and the top 15%, they enjoy development, they get projects, they get all the access.
But the challenges in the case of Indonesia that this are five to eight, we experience a negative growth, and this group of people, they are not poor, they are not eligible for the social protection, but they are one shock away to become poor. So if there is geopolitical shock now, high oil prices, etc., this will induce a sort of like the issue of the social possibility of the social, and to make things worse, most of this middle class, they are educated and they are young.
So this is a very important issue that we have to look at more, because most of the economic policy just focus on the poor, but we neglected the middle class. I hope I respond to your question.
We will take one last question from here. Please switch on your mic.
Good evening, everyone. My question is for Mr. Das. I am Shweta Punj from Money Control. Sir, we have seen four consecutive weeks... So, oh, Snickers. Split karna saste mein milega. Split. Now watch me. Console, now watch me. Speakers. Bhai, khud ko nahi, payment ko split karna. Super Money pe o split in three without any fee, shop anything on Super Money.
Up very shortly. So it's for the, you know, Reserve Bank to decide. I have my private views and private opinion, which is different. In a public forum, I would not like to say, because, you know, I think the central bank should take its independent decision, which has been the hallmark of the Reserve Bank of India over the years.
So I don't want to say in a public forum, which may get interpreted as trying to influence the central bank. The central bank should function independently and autonomously. Thank you. Sorry about that. I think we are out of time now. Please join me in thanking this wonderful panel. Thank you all for your insightful remarks.
Uncertainty across the world, and would perhaps, and would stifle global growth. What is like such a global environment, India's real GDP grew by an impressive 7.8% in the first quarter of the current financial year, with strong domestic demand and investment conditions. This quarterly growth has come on top of 7.9% average annual GDP growth recorded during the post-COVID period of five years, that is from 2021-22 to 2025-26.
In fact, as pointed out by my former colleague in the Reserve Bank of India, Dr. Michael Debabrata Patra, who is, I am happy...
I am happy to note present here, if the period from July–September 2025-26 to April–June 2026-27 is taken into account, real GDP growth in India just exceeds 8%. This resonates with my statement to the Financial Times, London, a few months ago, that India is within a striking distance of 8% growth. Now, what are the factors behind the resilience of the Indian economy? Kautilya had emphasized that a ruler's foremost responsibility was to anticipate risk, safeguard the state against internal and external threats, and establish institutions capable of preventing and mitigating calamities. A distinguishing feature of India's development journey in the last 12 years has been the gradual creation of governance foundations before the crisis actually emerged. Many of the reforms undertaken over the past decade were not designed as major measures but as specific buffers to enable the economy to absorb disruption and recover rapidly. I would put the flexible inflation targeting, introduction of the Goods and Services Tax, the big push for digital payments, and the banking reforms among others in this category. Thus, India's resilience is not accidental. It is the outcome of broad and mutually reinforcing reforms. I would like to highlight three major components of this broad-based approach. First, strengthening governance and state capacity.
Governments derive credibility from the outcomes of their actions. In the Arthashastra, Kautilya argues that a ruler's interests are inseparable from those of the citizens. Over the past decade, improvements in public infrastructure, sanitation, financial inclusion, housing, household electrification, digital services, and welfare delivery have contributed to stronger citizen-state engagement. When citizens experience tangible improvements in their lives, confidence in institutions increases. This confidence becomes a critical resource for governments seeking to undertake difficult reforms. One of the clearest examples of proactive institution building has been India's digital public infrastructure, or what is otherwise known as the India Stack.
The JAM Trinity, consisting of Jan Dhan bank accounts, Aadhaar, and mobile connectivity, was established well before the COVID-19 pandemic. And when the need arose, it enabled rapid transfer of financial benefits to millions of citizens affected by the COVID. Digital governance has reduced information asymmetries, streamlined administrative processes, and enhanced accountability. Illustratively, direct benefit transfers have significantly reduced leakages in welfare programs, with estimated savings of around ₹5.1 lakh crore.
A significant dimension of India's recent development journey has been its success in extending the reach of governance, economic opportunity, and public services to certain regions that had long remained on the margins of growth due to left-wing extremism and terrorism. Success in overcoming these problems, which had become sticky, resonates with Kautilya's emphasis on the authority of the state to maintain law, order, and discipline. The second major initiative for strengthening India's resilience has been building macroeconomic stability. If you recall, I pointed out that I would like to highlight three major themes as factors behind the resilience of the Indian economy. The first one I have highlighted is strengthening governance and state capacity. I move on to the second major initiative, which is building macroeconomic stability. Now, this is built upon five distinct pillars. First, inflation targeting and monetary policy credibility. The adoption of the flexible inflation targeting framework since 2016 enabled India to navigate through the successive shocks of COVID, the war in Ukraine, and the current conflicts in West Asia. Flexible inflation targeting has, in fact, created and provided the bedrock for India's high and sustained growth. The second component is fiscal prudence and quality of expenditure. In fiscal policy, the government has shown sustained commitment to fiscal consolidation and reduction of fiscal deficit without compromising on growth-inducing expenditure. A roadmap for reduction in government debt-to-GDP ratio to 50% by March 2031 has also been announced. The third component of the macroeconomic stability — which is the main theme I mentioned — is tax reforms and market integration. The introduction of the Goods and Services Tax in 2017 created an integrated national market, removed cascading burden of taxes, expanded the tax base and compliance, and led to greater formalization of the economy. Reforms in income tax have improved competitiveness of firms and reduced tax burdens on middle classes. The results have been telling.
The fourth component is restoration of the health and stability of the financial sector. In fact, restoration of the fine health of the financial sector, I would like to say, has been the defining feature of India's resilience in the recent years. India's financial sector has emerged as a strong pillar of economic growth, supported by reforms such as the Insolvency and Bankruptcy Code, bank recapitalization, and constructive regulatory oversight. Gross non-performing assets have fallen sharply to 1.68% in June 2026, while bank profitability has improved significantly. And finally, prudent management of the external sector has also supported India's efforts towards macroeconomic stability. India's external sector indicators have remained broadly resilient due to a mix of factors like the ongoing diversification of exports, conclusion of free trade agreements, sustained surplus in services trade, and steady inward remittances. Current account deficit for 2025-26 remains well within manageable levels at 6% of GDP. Other key external sector vulnerability indicators have also remained well contained. The third major initiative — I said I will mention three major initiatives — the third major initiative is building resilience. In building India's resilience is investment in long-term productive capacity. This is built upon, again, three major building blocks. First, infrastructure and logistics transformation through large-scale investment and coordinated transport planning. The Gati Shakti — that is, the Gati Shakti — India has expanded physical and digital connectivity, logistics efficiency, and access to national services. Initiatives such as the National Logistics Policy, the Sagarmala, the Jal Jeevan Mission, and Udan exemplify a governance model that is citizen-centric and integrates planning, execution, and monitoring across sectors. The result has been lower economic frictions, greater competitiveness, enhanced market integration, and a stronger foundation for investment-led growth. No wonder India's rank in the World Bank Logistics Performance Index improved from 54 in 2014 to 38 in 2023. India aims to enter the top 25 by 2030.
India has also developed a diverse range of energy sources from fossil fuels, renewables, biofuels, and nuclear energy. City gas distribution has expanded to 700 cities, piped cooking gas has reached 1.75 crore households, and solar energy capacity has surged to 1,165 gigawatts. India has emerged as the third-largest country in renewable energy capacity. Reliability of energy supply has also improved significantly. Under the Prime Minister Surya Ghar Muft Bijli Yojana, more than 50 lakh households now have rooftop solar installations. Household power bills have been reduced to either zero, and many households have been able to generate additional income through sale of surplus power. India is now better positioned to withstand external energy shocks. Finally, the third component is manufacturing and industrial development. Flagship schemes such as the Production Linked Incentive Scheme, the PM MITRA, and Skill India are accelerating capacity building and strengthening India's manufacturing ecosystem. We are now witnessing a manufacturing resurgence in India. Illustratively, India has become the second-largest mobile phone manufacturer globally. Semiconductors have also made a big entry into India's manufacturing space. Investments in automation, robotics, and Industry 4.0 technologies are also adding to the robustness of this system. India now stands at a pivotal moment in its development journey. I repeat, India now stands at a pivotal moment in its development journey. A leap to Viksit Bharat 2047 is very much in the realm of realization. The journey ahead is focused on capitalizing on emerging opportunities. I proposed to highlight five major areas where the pace of activity will get significantly enhanced in the coming years. First, harnessing the AI revolution. Artificial intelligence represents perhaps the single most transformative technological development of this century so far. As a general-purpose technology, AI has immense potential to enhance productivity, improve public service delivery, accelerate scientific discovery, strengthen healthcare outcomes, and transform education. India's AI strategy rests on two complementary pillars. First, building sovereign AI capabilities through investments in indigenous foundation models, high-performance computing infrastructure, semiconductor development, and a robust innovation ecosystem. The AI Mission, the AI Kosha, and the India Semiconductor Mission are laying the foundations for long-term technological competitiveness. Second, India is pursuing the vision of AI for All. Initiatives such as Bhashini seek to bridge linguistic barriers, while India AI FutureSkills aim to democratize access to AI capabilities. Attention is also focused on critical issues relating to concentration of technological power, data governance, cybersecurity, algorithmic bias, and AI safety. The second major component of the way forward is deepening India's financial sector. As India's economic weight expands, the financial architecture must deepen commensurately. While India's financial ecosystem has evolved significantly, the next phase of growth will require strengthening of long-term finance and patient capital. This underscores the need to further deepen corporate bond markets, pension and insurance funds, municipal finance, innovative infrastructure financing, and a market for green and transition finance. The third component is promoting strategic Atmanirbharta, or self-reliance. Now, Atmanirbharta does not imply isolation; rather, it stands for building stronger domestic capabilities while remaining integrated with global markets and concluding more free trade agreements. Efforts are now focused on enhancing our presence in the global supply chains, strategic manufacturing, defense production, and domestic development of critical technologies. The fourth component is sustainable development and climate leadership. India's rise must also be environmentally sustainable. We have made notable progress in renewable energy development and climate commitments. The next phase of growth will be driven by initiatives such as the National Green Hydrogen Mission, electric mobility, energy-efficient infrastructure, sustainable agriculture, and circular economy practices. The fifth component is investing in human capital. India has made substantial progress in expanding access to health and education over the last 12 years. The number of universities increased from fewer than 350 — that is, from less than 350 to nearly 1,000 — and medical colleges from less than 400 to another 850. The next stage of development will enhance emphasis on learning outcomes, healthcare delivery, preventive care, research, and workforce skills. Let me now conclude. If we pause for a moment and reflect upon India's story of resilience and its forward-looking strategy, what comes out clearly is a resonance with Kautilya's thoughts and advocacy. As we advance towards the vision of Viksit Bharat, sustaining the reform momentum will be very critical. Kautilya had explained long ago, and [advertisement in Hindi: 'Pesh hai naya Veer CNG 1.1 XL. Ek full tank mein chale 450 kilometer se zyada. Jab dhanda ki ho, just go. Phir CNG chalta jaye.'] It is to grow sustainably and resiliently over the long term. Thank you very much. Namaskar. [Applause]
Uncertainty across the world, and would perhaps stifle global growth. But in the current context, as I have very briefly — I just touched upon — the emphasis has been to build our domestic capacity, domestic competence in areas where we are largely import-dependent. So whether it is energy, or it is in fertilizer, and so many other areas, the government is now focusing on such areas. Apart from that, the focus of the government is also on areas, you know, to take measures and to develop, you know, long-term capacity in areas where, again, we are dependent on sort of imports. Take the example of the rare earth permanent magnets. Now, last year, when there were restrictions on imports, and it was not, you know, it became a major problem because China had imposed certain restrictions for whatever reason — they know better. It was a problem for almost the whole of the world, and because almost 80 to 90% of rare earth magnet supply and in that entire ecosystem originates in China. So, the Government of India at that time, you know, the central government came out immediately thereafter with a major initiative to develop domestic capacity in, you know, in rare earth permanent magnets, because that is one critical component on which manufacture of, you know, automobiles, automobile manufacturing, electronic hardware manufacturing, and so much other manufacturing depends. And for example, recently the government has approved — the cabinet has approved what is called the Samudrayaan scheme. We have, you know, earlier there was a time when for oil and petroleum exploration, oil and gas exploration, there were certain areas in our coast, in the high seas, which were described as no-go zones for whatever reason. Now that no-go, you know, that distinction has been removed, and we are now entering into deep water exploration to again develop domestic sources of energy supply, gas, and oil. So, I can go on giving many examples. I have just mentioned two illustrations. It is basically, number one, to continue with the structural reforms, whatever remaining reform agenda is there, to continue with that. Number two, to develop domestic capabilities where the country is largely dependent on imports. And thirdly, to continuously focus on stability, as I have explained. Stability consisting of fiscal, monetary, and overall macroeconomic and macro-financial stability, because that provides the bedrock that supports long-term growth. So, broadly, I would say this is the approach the government is taking. Thank you.
We will take two questions, but keep them very brief. The gentleman in the front. Sorry, the answer was much, much longer. Sorry for that. The gentleman in the front, followed by you, please.
This is a very important question. I tried to look at the gross incidence curve for many countries. It is because in the past we just focused on the bottom 30%, right? And then the bottom 30%, the poorest, they are basically relatively well-protected because we give the social protection. And the top 15%, they enjoy development, they get projects, they get all the access. But the challenge is in the case of India that this 5 to 8% — we experience a negative growth. And this group of people, they are not poor, they are not eligible for the social protection, but they are one shock away from becoming poor. So if there is a geopolitical shock now, high oil prices, etc., this will induce a sort of like the issue of the social possibility of the social unrest, and to make things worse, most of this middle class, they are educated and they are young. So this is a very important issue that we have to look at more, because most of the economic policy just focuses on the poor, but we neglect the middle class. I hope I have responded to your question.
We will take one last question from here. Please switch on your mic.
Good evening, everyone. My question is for Mr. Das. I am Shweta Punj with Moneycontrol. Sir, we have seen four consecutive weeks of decline on the stock markets. I wanted to get your view on how are you viewing what we are seeing on the equity markets. Also on the balancing act for the central bank between managing inflationary expectations and growth.
No, I am not an expert on stock markets. So I would not like to comment on stock markets, and more so because you see it so happens that I occupy a certain position. So whatever I say and don't say, both are equally important. Whatever I say and don't say can have an impact on certain sections of the market. So I would not like to comment on that. And again, I am sorry. The next monetary policy, I think, is coming up very shortly. So it is for the, you know, Reserve Bank to decide. I have my private views and private opinion, which is different. In a public forum, I would not like to say because, you know, I think the central bank should take its independent decision, which has been the hallmark of the Reserve Bank of India over the years. So I don't want to say in a public forum, which may get interpreted as trying to influence the central bank. The central bank should function independently and autonomously. Thank you. Sorry about that.
I think we are out of time now. Please join me in thanking this wonderful panel. Thank you all for your insightful remarks.
Uncertainty across the world, and would perhaps stifle global growth. What is likely to follow is restrictive monetary policies from central banks. Even more critical is the exceptionally high public debt levels in many advanced economies, averaging close to 110% of their GDP, and resulting in rising bond yields, lower fiscal space, and the ability of the countries to counter current and future shocks. Despite such a global environment, India's real GDP grew by an impressive 7.8% in the first quarter of the current financial year, with strong domestic demand and investment conditions. This quarterly growth has come on top of 7.9% average annual GDP growth recorded during the post-COVID period of five years. That is from 2021-22 to 2025-26. In fact, as pointed out by my former colleague in the Reserve Bank of India, Dr. Michael Patra, who is, I am happy to note, present here, if the period from July–September 2025-26 to April–June 2026-27 is taken into account, real GDP growth in India just exceeds 8%. This resonates with my statement to the Financial Times, London, a few months ago, that India is within a striking distance of 8% growth. Now, what are the factors behind the resilience of the Indian economy? Kautilya had emphasized that a ruler's foremost responsibility was to anticipate risk, safeguard the state against internal and external threats, and establish institutions capable of preventing and mitigating calamities. A distinguishing feature of India's development journey in the last 12 years has been the gradual creation of governance foundations before the crisis actually emerged. Many of the reforms undertaken over the past decade were not designed as major measures but as specific buffers to enable the economy to absorb disruptions and recover rapidly. I would put the flexible inflation targeting, introduction of the Goods and Services Tax, the big push for digital payments, and the banking reforms among others in this category. Thus, India's resilience is not accidental. It is the outcome of broad and mutually reinforcing reforms. I would like to highlight three major components of this broad-based approach. First, strengthening governance and state capacity.
Governments derive credibility from the outcomes of their actions. In the Arthashastra, Kautilya argues that a ruler's interests are inseparable from those of the citizens. Over the past decade, improvements in public infrastructure, sanitation, financial inclusion, housing, household electrification, digital services, and welfare delivery have contributed to stronger citizen-state engagement. When citizens experience tangible improvements in their lives, confidence in institutions increases. This confidence becomes a critical resource for governments seeking to undertake difficult reforms. One of the clearest examples of proactive institution building has been India's digital public infrastructure, or what is otherwise known as the India Stack.
The JAM Trinity, consisting of Jan Dhan bank accounts, Aadhaar, and mobile connectivity, was established well before the COVID-19 pandemic. And when the need arose, it enabled rapid transfer of financial benefits to millions of citizens affected by the COVID. Digital governance has reduced information asymmetries, streamlined administrative processes, and enhanced accountability. Illustratively, direct benefit transfers have significantly reduced leakages in welfare programs, with estimated savings of around ₹5.1 lakh crore.
A significant dimension of India's recent development journey has been its success in extending the reach of governance, economic opportunity, and public services to certain regions that had long remained on the margins of growth due to left-wing extremism and terrorism. Success in overcoming these problems, which had become sticky, resonates with Kautilya's emphasis on the authority of the state to maintain law, order, and discipline. The second major initiative for strengthening India's resilience has been building macroeconomic stability. If you recall, I pointed out that I would like to highlight three major themes as factors behind the resilience of the Indian economy. The first one I have highlighted is strengthening governance and state capacity. I move on to the second major initiative, which is building macroeconomic stability. Now, this is built upon five distinct pillars. First, inflation targeting and monetary policy credibility. The adoption of the flexible inflation targeting framework since 2016 enabled India to navigate through the successive shocks of COVID, the war in Ukraine, and the current conflicts in West Asia. Flexible inflation targeting has, in fact, created and provided the bedrock for India's high and sustained growth. The second component is fiscal prudence and quality of expenditure. In fiscal policy, the government has shown sustained commitment to fiscal consolidation and reduction of fiscal deficit without compromising on growth-inducing expenditure. A roadmap for reduction in government debt-to-GDP ratio to 50% by March 2031 has also been announced. The third component of the macroeconomic stability — which is the main theme I mentioned — is tax reforms and market integration. The introduction of the Goods and Services Tax in 2017 created an integrated national market, removed cascading burden of taxes, expanded the tax base and compliance, and led to greater formalization of the economy. Reforms in income tax have improved competitiveness of firms and reduced tax burdens on middle classes. The results have been telling.
The fourth component is restoration of the health and stability of the financial sector. In fact, restoration of the fine health of the financial sector, I would like to say, has been the defining feature of India's resilience in the recent years. India's financial sector has emerged as a strong pillar of economic growth, supported by reforms such as the Insolvency and Bankruptcy Code, bank recapitalization, and constructive regulatory oversight. Gross non-performing assets have fallen sharply to 1.68% in June 2026, while bank profitability has improved significantly. And finally, prudent management of the external sector has also supported India's efforts towards macroeconomic stability. India's external sector indicators have remained broadly resilient due to a mix of factors like the ongoing diversification of exports, conclusion of free trade agreements, sustained surplus in services trade, and steady inward remittances. Current account deficit for 2025-26 remains well within manageable levels at 6% of GDP. Other key external sector vulnerability indicators have also remained well contained. The third major initiative — I said I will mention three major initiatives — the third major initiative is building resilience. In building India's resilience is investment in long-term productive capacity. This is built upon, again, three major building blocks. First, infrastructure and logistics transformation through large-scale investment and coordinated transport planning. The Gati Shakti — that is, the Gati Shakti — India has expanded physical and digital connectivity, logistics efficiency, and access to national services. Initiatives such as the National Logistics Policy, the Sagarmala, the Jal Jeevan Mission, and Udan exemplify a governance model that is citizen-centric and integrates planning, execution, and monitoring across sectors. The result has been lower economic frictions, greater competitiveness, enhanced market integration, and a stronger foundation for investment-led growth. No wonder India's rank in the World Bank Logistics Performance Index improved from 54 in 2014 to 38 in 2023. India aims to enter the top 25 by 2030.
India has also developed a diverse range of energy sources from fossil fuels, renewables, biofuels, and nuclear energy. City gas distribution has expanded to 700 cities, piped cooking gas has reached 1.75 crore households, and solar energy capacity has surged to 1,665 gigawatts. India has emerged as the third-largest country in renewable energy capacity. Reliability of energy supply has also improved significantly. Under the Prime Minister Surya Ghar Muft Bijli Yojana, more than 50 lakh households now have rooftop solar installations. Household power bills have been reduced to either zero, and many households have been able to generate additional income through sale of surplus power. India is now better positioned to withstand external energy shocks. Finally, the third component is manufacturing and industrial development. Flagship schemes such as the Production Linked Incentive Scheme, the PM MITRA, and Skill India are accelerating capacity building and strengthening India's manufacturing ecosystem. We are now witnessing a manufacturing resurgence in India. Illustratively, India has become the second-largest mobile phone manufacturer globally. Semiconductors have also made a big entry into India's manufacturing space. Investments in automation, robotics, and Industry 4.0 technologies are also adding to the robustness of this system. India now stands at a pivotal moment in its development journey. I repeat, India now stands at a pivotal moment in its development journey. A leap to Viksit Bharat 2047 is very much in the realm of realization. The journey ahead is focused on capitalizing on emerging opportunities. I proposed to highlight five major areas where the pace of activity will get significantly enhanced in the coming years. First, harnessing the AI revolution. Artificial intelligence represents perhaps the single most transformative technological development of this century so far. As a general-purpose technology, AI has immense potential to enhance productivity, improve public service delivery, accelerate scientific discovery, strengthen healthcare outcomes, and transform education. India's AI strategy rests on two complementary pillars. First, building sovereign AI capabilities through investments in indigenous foundation models, high-performance computing infrastructure, semiconductor development, and a robust innovation ecosystem. The AI Mission, the AI Kosha, and the India Semiconductor Mission are laying the foundations for long-term technological competitiveness. Second, India is pursuing the vision of AI for All. Initiatives such as Bhashini seek to bridge linguistic barriers, while India AI FutureSkills aim to democratize access to AI capabilities. Attention is also focused on critical issues relating to concentration of technological power, data governance, cybersecurity, algorithmic bias, and AI safety. The second major component of the way forward is deepening India's financial sector. As India's economic weight expands, the financial architecture must deepen commensurately. While India's financial ecosystem has evolved significantly, the next phase of growth will require strengthening of long-term finance and patient capital. This underscores the need to further deepen corporate bond markets, pension and insurance funds, municipal finance, innovative infrastructure financing, and a market for green and transition finance. The third component is promoting strategic Atmanirbharta, or self-reliance. Now, Atmanirbharta does not imply isolation; rather, it stands for building stronger domestic capabilities while remaining integrated with global markets and concluding more free trade agreements. Efforts are now focused on enhancing our presence in the global supply chains, strategic manufacturing, defense production, and domestic development of critical technologies. The fourth component is sustainable development and climate leadership. India's rise must also be environmentally sustainable. We have made notable progress in renewable energy development and climate commitments. The next phase of growth will be driven by initiatives such as the National Green Hydrogen Mission, electric mobility, energy-efficient infrastructure, sustainable agriculture, and circular economy practices. The fifth component is investing in human capital. India has made substantial progress in expanding access to health and education over the last 12 years. The number of universities increased from fewer than 350 — that is, from less than 350 to nearly 1,000 — and medical colleges from less than 400 to another 850. The next stage of development will enhance emphasis on learning outcomes, healthcare delivery, preventive care, research, and workforce skills. Let me now conclude. If we pause for a moment and reflect upon India's story of resilience and its forward-looking strategy, what comes out clearly is a resonance with Kautilya's thoughts and advocacy. As we advance towards the vision of Viksit Bharat, sustaining the reform momentum will be very critical. Kautilya had explained long ago, and [advertisement in Hindi: 'Pesh hai naya Veer CNG 1.1 XL. Ek full tank mein chale 450 kilometer se zyada. Jab dhanda ki ho, just go. Phir CNG chalta jaye.'] It is to grow sustainably and resiliently over the long term. Thank you very much. Namaskar. [Applause]
areas where the pace of activity will get significantly enhanced in the coming years. First, harnessing the AI revolution. Artificial intelligence represents perhaps the single most transformative technological development of this century so far. As a general-purpose technology, AI has immense potential to enhance productivity, improve public service delivery, accelerate scientific discovery, strengthen healthcare outcomes, and transform education. India's AI strategy rests on two complementary pillars. First, building sovereign AI capabilities through investments in indigenous foundation models, high-performance computing infrastructure, semiconductor development, and a robust innovation ecosystem. The AI Mission, the AI CoE, and the India Semiconductor Mission are laying the foundations for long-term technological competitiveness. Second, India is pursuing the vision of AI for All initiatives such as Bhashini, which seek to bridge linguistic barriers, while IndiaAI FutureSkills aims to democratize access to AI capabilities. Attention is also focused on critical issues relating to concentration of technological power, data governance, cybersecurity, algorithmic bias, and AI safety. The second major component of the way forward is deepening India's financial sector. As India's economic weight expands, the financial architecture must deepen commensurately. While India's financial ecosystem has evolved significantly, the next phase of growth will require strengthening of long-term finance and patient capital. This underscores the need to further deepen corporate bond markets, pension and insurance funds, municipal finance, innovative infrastructure financing, and a market for green and transition finance. The third component is promoting strategic self-reliance. Now, self-reliance does not imply isolation; rather, it stands for building stronger domestic capabilities while remaining integrated with global markets and concluding more free trade agreements. Efforts are now focused on enhancing our presence in the global supply chains, strategic manufacturing, defense production, and domestic development of critical technologies. The fourth component is sustainable development and climate leadership. India's rise must also be environmentally sustainable. We have made notable progress in renewable energy development and climate commitments. The next phase of growth will be driven by initiatives such as the National Green Hydrogen Mission, electric mobility, energy-efficient infrastructure, sustainable agriculture, and circular economy practices. The fifth component is investing in human capital. India has made substantial progress in expanding access to health and education. Over the last 12 years, the number of universities increased from fewer than 350 — that is, from less than 350 to nearly 1,000 — and medical colleges from less than 400 to another 850. The next stage of development will enhance emphasis on learning outcomes, healthcare delivery, preventive care, research, and workforce skills. Let me now conclude. If we pause for a moment and reflect upon India's story of resilience and its forward-looking strategy, what comes out clearly is a resonance with Kautilya's thoughts and advocacy. As we advance towards the vision of Viksit Bharat, sustaining the reform momentum will be very critical. Kautilya had explained long time ago, and I quote: 'Which is preferable — an immediate small gain, or a large gain in the future? A large gain in the future is preferable if it is like a seed yielding fruit in the future.' Unquote. India's strategy is no longer to simply grow rapidly; it is to grow sustainably and resiliently over the long term. Thank you very much. Namaskar.
uncertain to do, but in the current context, as I have very briefly — I just touched upon — the emphasis has been to build our domestic, you know, to build our domestic capacity, domestic competence in areas where we are largely import-dependent. So whether it is energy, or it is in fertilizer, and so many other areas, the government is now focusing on such areas. Apart from that, the focus of the government is also on areas, you know, to take measures and to develop, you know, long-term capacity in areas where again we are dependent on sort of imports. Take the example of the rare earth permanent magnets. Now, last year, when there were restrictions on imports, and it was not, you know, it became a major problem because China had imposed certain restrictions for whatever reason — they know better. It was a problem for almost the whole of the world, and because almost 80 to 90 percent of rare earth magnet supply and in that entire ecosystem originates in China. So the Government of India at that time, you know, the central government came out immediately thereafter with a major initiative to develop domestic capacity in, you know, in rare earth permanent magnets, because that is one critical component on which manufacture of, you know, automobiles, automobile manufacturing, electronic hardware manufacturing, and so much other manufacturing depends. And for example, recently the government has approved — the cabinet has approved what is called the Samudrayaan scheme. We have, you know, earlier there was a time when for oil and petroleum exploration, oil and gas exploration, there were certain areas in our coast, in the high seas, which were described as no-go zones, for whatever reason. Now that no-go, you know, that distinction has been removed, and we are now entering into deep water exploration to again develop domestic sources of energy supply, gas and oil. So I can go on giving many examples. I have just mentioned two illustrations. It is basically number one, to continue with the structural reforms — whatever remaining reforms agenda are there, to continue with that. Number two, to develop domestic capabilities where the country is largely dependent on imports. And thirdly, to continuously focus on stability, as I have explained. Stability consisting of fiscal, monetary, and overall macroeconomic and macrofinancial stability, because that provides the bedrock that supports long-term growth. So broadly, I would say this is the, you know, this is the approach the government is taking.
Thank you. We will take two questions, but keep them very brief. The gentleman in the front. Sorry, the answer was much, much longer. Sorry for that. The gentleman in the front, followed by you, please.
It's a question for Minister Basu. You mentioned inequality more visible politically because of social networks and more, and the problem of the middle class. So we know the dynamics of this in advanced economies. It can be extremely powerful and positive, or not. Do you expect this kind of consideration to influence policy-making and economic policy-making in big economies in the future? To you?
This is a very important question. I tried to look at the growth incidence curve for many countries. It is because in the past we just focused on the bottom 30 percent, right? And then the bottom 30 percent, the poor, they are basically relatively well-protected because we give the social protection, and the top 15 percent, they enjoy development, they get projects, they get all the access. But the challenges in the case of Indonesia that this R5 to R8, we experience a negative growth, and this group of people, they are not poor, they are not eligible for social protection, but they are one shock away to become poor. So if there is geopolitical shock nowadays, high oil prices, etc., this will induce a sort of like the issue of the social possibility of the social, and to make things worse, most of this middle class, they are educated and they are young. So this is a very important issue that we have to look at more, because most of the economic policy just focused on the poor, but we neglected the middle class. I hope I responded to your question.
We will take one last question from here. Please switch on your mic.
Good evening, everyone. My question is for Mr. Das. I am Shweta Punj with Moneycontrol. Sir, we have seen four consecutive weeks of decline on the stock markets. I wanted to get your view in on how are you viewing what we are seeing on the equity markets, also on the balancing act for the central bank between managing inflationary expectations and growth.
No, I am not an expert on stock markets, so I would not like to comment on stock markets. And more so because you see, it so happens that I occupy a certain position. So whatever I say and don't say, both are equally important. Whatever I say and don't say can have an impact on certain sections of the market. So I would not like to comment on. And again, I am sorry. The next monetary policy, I think, is coming up very shortly. So it's for the, you know, Reserve Bank to decide. I have my private views and private opinion, which is different. In a public forum, I would not like to say because, you know, I think the central bank should take its independent decision, which has been the hallmark of the Reserve Bank of India over the years. So I don't want to say in a public forum, which may get interpreted as trying to influence the central bank. The central bank should function independently and autonomously. Thank you. Sorry about that.
I think we are out of time now. Please join me in thanking this wonderful panel. Thank you all for your insightful remarks.
uncertainty across the world and would perhaps — and would stifle global growth. What is likely to follow is restrictive monetary policies from central banks. Even more critical is the exceptionally high public debt levels in many advanced economies, averaging close to 110 percent of their GDP, and resulting in rising bond yields, lower fiscal space, and the ability of the countries to counter current and future shocks. Despite such a global environment, India's real GDP grew by an impressive 7.8 percent in the first quarter of the current financial year, with strong domestic demand and investment conditions. This quarterly growth has come on top of 7.9 percent average annual GDP growth recorded during the post-COVID period of five years. That is from 2021-22 to 2025-26. In fact, as pointed out by my former colleague in the Reserve Bank of India, Dr. Michael Patra, who is, I am happy to note, present here, if the period from July-September 2025-26 to April-June 2026-27 is taken into account, real GDP growth in India just exceeds 8 percent. This resonates with my statement to Financial Times, London, a few months ago, that India is within a striking distance of 8 percent growth. Now, what are the factors behind the resilience of the Indian economy? Kautilya had emphasized that a ruler's foremost responsibility was to anticipate risk, safeguard the state against internal and external threats, and establish institutions capable of preventing and mitigating calamities. A distinguishing feature of India's development journey in the last 12 years has been the gradual creation of governance foundations before the crisis actually emerged. Many of the reforms undertaken over the past decade were not designed as one-off measures, but as specific buffers to enable the economy to absorb disruption and recover rapidly. I would put the flexible inflation targeting, introduction of the Goods and Services Tax, the big push for digital payments, and the banking reforms, among others, in this category. Thus, India's resilience is not accidental. It is the outcome of broad and mutually reinforcing reforms. I would like to highlight three major components of this broad-based approach. First, strengthening governance and state capacity. Governments derive credibility from the outcomes of their actions. In the Arthashastra, Kautilya argues that a ruler's interests are inseparable from those of the citizens. Over the past decade, improvements in public infrastructure, sanitation, financial inclusion, housing, household electrification, digital services, and welfare delivery have contributed to strong citizen-state engagement. When citizens experience tangible improvements in their lives, confidence in institutions increases. This confidence becomes a critical resource for governments seeking to undertake difficult reforms. One of the clear examples of proactive institution-building has been India's digital public infrastructure, or what is otherwise known as the India Stack. The JAM Trinity, consisting of Jan Dhan bank accounts, Aadhaar, and mobile connectivity, was established well before the COVID-19 pandemic, and when the need arose, it enabled rapid transfer of financial benefits to millions of citizens affected by the COVID. Digital governance has reduced information asymmetries, streamlined administrative processes, and enhanced accountability. Illustratively, direct benefit transfers have significantly reduced leakages in welfare programs, with estimated savings of around 5.1 lakh crore. A significant dimension of India's recent development journey has been its success in extending the reach of governance, economic opportunity, and public services to certain regions that had long remained on the margins of growth due to left-wing extremism and terrorism. Success in overcoming the problems which had become sticky resonates with Kautilya's emphasis on that is the authority of the state to maintain law, order, and discipline. The second major initiative for strengthening India's resilience has been building macroeconomic stability. If you recall, I pointed out that I would like to highlight three major themes as factors behind the resilience of the Indian economy. The first one I have highlighted is strengthening governance and state capacity. I move on to the second major initiative, which is building macroeconomic stability. Now, this is built upon five distinct pillars. First, inflation targeting and monetary policy credibility. The adoption of flexible inflation targeting framework since 2016 enabled India to navigate through the successive shocks of COVID, the war in Ukraine, and the current conflicts in West Asia. Flexible inflation targeting has provided — as in fact created and provided the bedrock for India's high and sustained growth. The second component is fiscal prudence and quality of expenditure. In fiscal policy, the government has shown sustained commitment to fiscal consolidation and reduction of fiscal deficit without compromising on growth-inducing expenditure. A roadmap for reduction in government debt-GDP ratio to 50 percent by March 2031 has also been announced. Third component of the macroeconomic — you know, what I mentioned, the macroeconomic stability, which is the main theme which I mentioned, is tax reforms and market integration. The introduction of the Goods and Services Tax in 2017 created an integrated national market, removed cascading burden of taxes, expanded the tax base and compliance, and led to greater formalization of the economy. Reforms in income tax have improved competitiveness of firms and reduced tax burdens on middle classes. The results have been telling. The fourth component is restoration of the health and stability of the financial sector. In fact, restoration of the fine health of the financial sector, I would like to say, has been the defining feature of India's resilience in the recent years. India's financial sector has emerged as a strong pillar of economic growth, supported by reforms such as the Insolvency and Bankruptcy Code, bank recapitalization, and constructive regulatory oversight. Gross non-performing assets have fallen sharply to 1.68 percent in June 2026, while bank profitability has improved significantly. And finally, prudent management of external sector has also supported India's efforts towards macroeconomic stability. India's external sector indicators have remained broadly resilient due to a mix of factors like the ongoing diversification of exports, conclusion of free trade agreements, sustained surplus in services trade, and steady inward remittances. Current account deficit for 2025-26 remained well within manageable levels at 1.6 percent of GDP. Other key external sector vulnerability indicators have also remained well contained. The third major initiative — I said I will mention three major initiatives. The third major initiative is building resilience — in building India's resilience is investment in long-term productive capacity. This is built upon again three major building blocks. First, infrastructure and logistics transformation through large-scale investment and coordinated transport planning. The Gati Shakti — in that is the Gati Shakti. India has expanded physical and digital connectivity, logistics efficiency, and access to national services. Initiatives such as the National Logistics Policy, the Sagarmala, the Jal Jeevan Mission, and Udan exemplify a governance model that is citizen-centric and integrates planning, execution, and monitoring across sectors. The result has been lower economic frictions, greater competitiveness, enhanced market integration, and a stronger foundation for investment-led growth. No wonder India's rank in the World Bank Logistics Performance Index improved from 54 in 2014 to 38 in 2023. India aims to enter the top 25 by 2030.
India has also developed a diverse range of energy sources from fossil fuel. And this is the second component I wanted to mention in the context of, you know, in the context of what I said, the third major initiative which contributed to enhancement of India's long-term productive capacity. India has developed a diverse range of energy sources from fossil fuel, renewables, biofuel, and nuclear energy. City gas distribution has expanded to 700 cities, piped cooking gas has reached 1.75 crore households, and solar energy capacity has surged to 165 gigawatt. India has emerged as — India has emerged as the third largest country in renewable energy capacity. Reliability of energy supply has also improved significantly. Under the Prime Minister Surya Ghar Muft Bijli Yojana, more than 50 lakh households now have rooftop solar installation. Household power bills have been reduced to either zero, and many households have been able to generate additional income through sale of surplus power. India is now better positioned to withstand external energy shocks. Finally, the third component is manufacturing and industrial development. Flagship schemes such as the Production Linked Incentive Scheme, the PM MITRA, and Skill India are accelerating capacity building and strengthening India's manufacturing ecosystem. We are now witnessing — we are now witness to a manufacturing resurgence in India. Illustratively, India has become the second largest mobile phone manufacturer globally. Semiconductors have also made a big entry into India's manufacturing space. Investments in automation, robotics, and Industry 4.0 technologies are also adding to the robustness of this system. India now stands at a pivotal moment in its development journey. I repeat, India now stands at a pivotal moment in its development journey. A leap to Viksit Bharat 2047 is very much in the realm of realization. The journey ahead is focused on capitalizing on emerging opportunities. I proposed to highlight five major areas where the pace of activity will get significantly enhanced in the coming years. First, harnessing the AI revolution. Artificial intelligence represents perhaps the single most transformative technological development of this century so far. As a general-purpose technology, AI has immense potential to enhance productivity, improve public service delivery, accelerate scientific discovery, strengthen healthcare outcomes, and transform education. India's AI strategy rests on two complementary pillars. First, building sovereign AI capabilities through investments in indigenous foundation models, high-performance computing infrastructure, semiconductor development, and a robust innovation ecosystem. The AI Mission, the AI CoE, and the India Semiconductor Mission are laying the foundations for long-term technological competitiveness. Second, India is pursuing the vision of AI for All initiatives such as Bhashini, which seek to bridge linguistic barriers, while IndiaAI FutureSkills aims to democratize access to AI capabilities. Attention is also focused on critical issues relating to concentration of technological power, data governance, cybersecurity, algorithmic bias, and AI safety. The second major component of the way forward is deepening India's financial sector. As India's economic weight expands, the financial architecture must deepen commensurately. While India's financial ecosystem has evolved significantly, the next phase of growth will require strengthening of long-term finance and patient capital. This underscores the need to further deepen corporate bond markets, pension and insurance funds, municipal finance, innovative infrastructure financing, and a market for green and transition finance. The third component is promoting strategic self-reliance. Now, self-reliance does not imply isolation; rather, it stands for building stronger domestic capabilities while remaining integrated with global markets and concluding more free trade agreements. Efforts are now focused on enhancing our presence in the global supply chains, strategic manufacturing, defense production, and domestic development of critical technologies. The fourth component is sustainable development and climate leadership. India's rise must also be environmentally sustainable. We have made notable progress in renewable energy development and climate commitments. The next phase of growth will be driven by initiatives such as the National Green Hydrogen Mission, electric mobility, energy-efficient infrastructure, sustainable agriculture, and circular economy practices. The fifth component is investing in human capital. India has made substantial progress in expanding access to health and education. Over the last 12 years, the number of universities increased from fewer than 350 — that is, from less than 350 to nearly 1,000 — and medical colleges from less than 400 to another 850. The next stage of development will enhance emphasis on learning outcomes, healthcare delivery, preventive care, research, and workforce skills. Let me now conclude. If we pause for a moment and reflect upon India's story of resilience and its forward-looking strategy, what comes out clearly is a resonance with Kautilya's thoughts and advocacy. As we advance towards the vision of Viksit Bharat, sustaining the reform momentum will be very critical. Kautilya had explained long time ago, and I quote: 'Which is preferable — an immediate small gain, or a large gain in the future? A large gain in the future is preferable if it is like a seed yielding fruit in the future.' Unquote. India's strategy is no longer to simply grow rapidly; it is to grow sustainably and resiliently over the long term. Thank you very much. Namaskar.
uncertain to do, but in the current context, as I have very briefly — I just touched upon — the emphasis has been to build our domestic, you know, to build our domestic capacity, domestic competence in areas where we are largely import-dependent. So whether it is energy, or it is in fertilizer, and so many other areas, the government is now focusing on such areas. Apart from that, the focus of the government is also on areas, you know, to take measures and to develop, you know, long-term capacity in areas where again we are dependent on sort of imports. Take the example of the rare earth permanent magnets. Now, last year, when there were restrictions on imports, and it was not, you know, it became a major problem because China had imposed certain restrictions for whatever reason — they know better. It was a problem for almost the whole of the world, and because almost 80 to 90 percent of rare earth magnet supply and in that entire ecosystem originates in China. So the Government of India at that time, you know, the central government came out immediately thereafter with a major initiative to develop domestic capacity in, you know, in rare earth permanent magnets, because that is one critical component on which manufacture of, you know, automobiles, automobile manufacturing, electronic hardware manufacturing, and so much other manufacturing depends. And for example, recently the government has approved — the cabinet has approved what is called the Samudrayaan scheme. We have, you know, earlier there was a time when for oil and petroleum exploration, oil and gas exploration, there were certain areas in our coast, in the high seas, which were described as no-go zones, for whatever reason. Now that no-go, you know, that distinction has been removed, and we are now entering into deep water exploration to again develop domestic sources of energy supply, gas and oil. So I can go on giving many examples. I have just mentioned two illustrations. It is basically number one, to continue with the structural reforms — whatever remaining reforms agenda are there, to continue with that. Number two, to develop domestic capabilities where the country is largely dependent on imports. And thirdly, to continuously focus on stability, as I have explained. Stability consisting of fiscal, monetary, and overall macroeconomic and macrofinancial stability, because that provides the bedrock that supports long-term growth. So broadly, I would say this is the, you know, this is the approach the government is taking.
Thank you. We will take two questions, but keep them very brief. The gentleman in the front. Sorry, the answer was much, much longer. Sorry for that. The gentleman in the front, followed by you, please.
It's a question for Minister Basu. You mentioned inequality more visible politically because of social networks and more, and the problem of the middle class. So we know the dynamics of this in advanced economies. It can be extremely powerful and positive, or not. Do you expect this kind of consideration to influence policy-making and economic policy-making in big economies in the future? To you?
This is a very important question. I tried to look at the growth incidence curve for many countries. It is because in the past we just focused on the bottom 30 percent, right? And then the bottom 30 percent, the poor, they are basically relatively well-protected because we give the social protection, and the top 15 percent, they enjoy development, they get projects, they get all the access. But the challenges in the case of Indonesia that this R5 to R8, we experience a negative growth, and this group of people, they are not poor, they are not eligible for the social protection, but they are one shock away to become poor. So if there is geopolitical shock nowadays, high oil prices, etc., this will induce a sort of like the issue of the social possibility of the social, and to make things worse, most of this middle class, they are educated and they are young. So this is a very important issue that we have to look at more, because most of the economic policy just focused on the poor, but we neglected the middle class. I hope I responded to your question.
We will take my last question from here. Please switch on your mic.
Good evening, everyone. My question is for Mr. Das. I am Shweta Punj with Moneycontrol. Sir, we have seen four consecutive weeks of decline on the stock markets. I wanted to get your view in on how are you viewing what we are seeing on the equity markets, also on the balancing act for the central bank between managing inflationary expectations and growth.
No, I am not an expert on stock markets, so I would not like to comment on stock markets. And more so because you see, it so happens that I occupy a certain position. So whatever I say and don't say, both are equally important. Whatever I say and don't say can have an impact on certain sections of the market. So I would not like to comment on that. And again, I am sorry. The next monetary policy, I think, is coming up very shortly. So it's for the, you know, Reserve Bank to decide. I have my private views and private opinion, which is different. In a public forum, I would not like to say because, you know, I think the central bank should take its independent decision, which has been
