Good evening everyone. It feels nice to be back in Mumbai and see so many known faces with whom I had worked for six years here and have had the opportunity also of interacting on a continuous basis even now. Sri Arun Puri, Sri Sidhar Jarabi, Miss Khalipuri, organizers of this event, Business Today, National Stock Exchange, which is hosting this event, and ladies and gentlemen and distinguished members of this gathering.
It's a great honor to stand before this August audience at the Business Today Banking and Economy Summit hosted at the prestigious National Stock Exchange building in Mumbai. The high editorial standards, expert analysis and impactful reports of Business Today have firmly established it as one of India's most trusted and authoritative voices in business journalism.
In fact, over the years, the India Today group has emerged as an institution that has transformed a single magazine into one of India's most diversified and influential media powerhouses. My congratulations to Sri Arun Puri and his team.
The presence of leaders from banking, policy and industry in this event today is not just a celebration of excellence but a reaffirmation of our shared responsibility to strengthen the foundations of growth, stability and inclusion for India's future.
We are living in an era of geopolitical shifts, more so given the events which are taking place since today morning. So this is an era of geopolitical shifts, rapid economic change, technological disruption and evolving expectations.
In this backdrop, I propose to speak on India's journey from being an incredible India to a credible India. An India that inspires trust and confidence.
The global economy is currently navigating an unusually turbulent and uncertain phase shaped by persistent geopolitical fragmentation, supply chain realignments and uneven economic momentum across regions.
The International Monetary Fund, that is the IMF, underscores this fragility noting that risks to global growth outlook remain firmly tilted to the downside.
Compounding this challenge is a possible tightening of financial conditions led by high public debt and widening fiscal deficits across several major economies. While global economic order is shifting under the weight of volatility, the Indian economy presents a picture of resilience and stability.
This has happened not by chance. It is indeed the result of surgically precise interventions by the government of India and I would also like to add the Reserve Bank of India. In the immediate aftermath of the COVID-19 pandemic, India undertook calibrated fiscal and monetary expansion which were rolled back in time and ensured that undesirable cholesterol was not built up in our economic and financial systems.
This was something unique among countries. As a result, Indian economy has emerged much stronger after the pandemic. In fact, in the post-pandemic period, nearly one-sixth of global real GDP growth has come from India. Thus establishing India firmly as one of the primary engines of global economic expansion.
Today, India is not just reacting to the world. We are influencing its future direction and shape. The National Statistics Office, that is the NSO, places India's real GDP growth for 2025-26, and as you would be aware the data was released yesterday, at 7.6%, reaffirming India's position as the fastest growing major economy in the world.
At a personal level, I am delighted to note that the GDP growth for 2024-25 is now estimated to be 7.1%. It was earlier estimated as 6.5% but now it is estimated according to the data released yesterday at 7.1%.
2024-25, as some of you would recall, was my last year in the Reserve Bank of India and the latest GDP data not only aligns with the Reserve Bank's estimates at that time but also dispels the narrative of gloom and doom in certain quarters about the impact of Reserve Bank's policies on the state of the economy during that year.
This data also unequivocally demonstrates the success of Reserve Bank's monetary policy in containing inflation without compromising the growth momentum of the economy. In fact, India's average real GDP growth during the post-pandemic five-year period, that is from 2021-22 to 2025-26, stands at an impressive 7.8%.
Throughout my career, I have had the privilege of serving government in multiple capacities. A journey that has allowed me to closely witness India's extraordinary economic transformation.
Seeing these shifts in policy, growth and national ambition unfold from such proximity has given me a ringside view of India's transformative journey. Drawing from this experience, I propose to reflect on nine building blocks that define the Indian economy and foster its credibility.
Building block one relates to structural reforms and institutional strength. Over the past decade, India has pursued a steady and credible reform agenda anchored in strong institutions and implementation of several structural reforms. This marks a pronounced shift towards a stable institution-driven reform agenda that enhances global confidence and trust in our policy direction.
Landmark reforms such as the implementation of the Goods and Services Tax, that is the GST, including the latest comprehensive reforms in GST which took place last year in the month of September. Enactment of the Insolvency and Bankruptcy Code, that is IBC. Adoption of flexible inflation targeting. Implementation of Real Estate Development Act, that is the RERA Act. Measures to improve ease of doing business, strategic schemes for self-reliance and several others have collectively reshaped the Indian economy.
What is even more important is that India is avoiding reform complacency by steadily advancing its next generation reforms. In a landmark measure in November 2025, that is last November, the government has operationalized the four labor codes to support a future ready workforce and a more competitive business environment. As you would recall, the labor codes were enacted in 2020, but it was notified for implementation in November last.
So the second building block which I am referring to, I am talking about nine building blocks as I said, and the first building block as I said relates to structural reforms. The second building block relates to fiscal prudence and capital expenditure push, that is capex push. At a time when public debt remains elevated and fiscal space under strain in many countries, India's fiscal trajectory stands out for combining consolidation with sustained public investment.
India has moved steadily along its fixed fiscal glide path reducing the deficit from the pandemic peak of 9.2% of GDP in 2021 to 4.4% in 2025-26 and is budgeted to be 4.3% in the financial year 2026-27.
This is precisely because of the kind of surgical, directed interventions which were undertaken both by the government in the fiscal front and the Reserve Bank of India in the monetary front.
Central government debt to GDP is targeted to reduce from 56.1% in 2025-26 to 50% plus or minus one by 2031. In a world where many nations are struggling with inflationary pressures and widening fiscal gaps, India's approach stands out as a model of prudence and stability.
A key marker of this fiscal stability is the improved quality of expenditure. The share of central government capex, that is capital expenditure, in its total spending has risen from about 12.3% in 2017-18. I repeat, the share of capital expenditure in the total spending of the central government has risen from 12.3% in 2017-18 to 22.1% in 2025-26 and is budgeted to increase further to 22.8% in 2026-27, strengthening the productive capacity of the economy.
One of the most powerful drivers of India's growth story is its unprecedented investment in infrastructure. The country's capital expenditure has seen a four-fold increase since 2017-18, rising to 11 lakh crore in 2025-26 and is budgeted at 12.2 lakh crore rupees in 2026-27.
The effective capital expenditure, that is capital expenditure including the grants in aid to states for capital expenditure, is expected to touch 17.1 lakh crore in 2026-27. These investments are not concentrated merely in mega cities but they span highways, ports, airports, digital infrastructure, logistics networks and urban renewal projects across the nation.
These systemic interventions are reducing logistics costs, improving connectivity and opening up opportunities beyond traditional urban clusters. Today, India is not just building infrastructure. It is building the scaffolding of a modern economy that can sustain high growth for decades.
The third building block of the Indian economy where it stands today, it relates to resurgence in manufacturing. Over the last decade, several policy measures were undertaken to shift the India story from a services-only narrative to a manufacturing resurgence.
Anchored by the Make in India initiative, the country has witnessed a sustained surge in industrial output. Strategic interventions like the production linked incentive schemes have reinforced this momentum. The manufacturing revival is especially pronounced in technology-intensive sectors.
Electronics manufacturing has grown more than fivefold over the last decade with record mobile phone production making India the second largest mobile phone manufacturer in the world. Ambitious semiconductor initiatives under the Rs 76,000 crore India Semiconductor Mission are building end-to-end capability.
India's pharmaceutical sector continues to dominate globally ranking third by volume and being the biggest supplier of low-cost vaccines in the world. The automotive industry has regained strong traction post pandemic with rising production and expanding exports and a clear movement up the global value chain.
Even India's defense manufacturing has witnessed a dramatic transformation with rapid surge in exports over the past decade. The fourth building block I would like to refer to is services sector resilience and moving up the global value chain. India's services sector is a major driver of exports and employment in the country. Services sector FDI inflows accounted for 80% of total FDI flows during 2022-23 to 2024-25.
From being described as the world's back office, India is now transitioning into value-added services and innovation. Nearly 1,800 global capability centers, that is GCCs, have come up contributing about US dollar 68 billion to the economy and employing over 2 million professionals. GCCs in India have become strategic hubs where teams design global products, lead R&D and manage entire intellectual property portfolios.
Further, India's artificial intelligence, that is AI, strategy is taking clear shape powered by the Rs 10,300 crore India AI Mission. The initiative focuses on building sovereign AI capacity through development of indigenous large language models, LLMs, across 22 Indian languages. At the same time, India is taking a smart and practical approach by focusing on small language models also, that is SLMs, which are cheaper to run, easier to train for Indian languages and can work even on smartphones.
Most importantly, India is building AI that solves real problems for citizens from healthcare to agriculture. Creating a model of AI for public good. The recently held AI Impact Summit 2026 in New Delhi will position India as a global leader in this direction.
The building block five which I would like to refer to relates to external sector and trade integration. India has entered 2026 with a remarkably resilient balance of payments supported by strong services exports, rising remittances and steady capital flows.
Despite global volatility, India's services sector led by IT and business services continues to generate robust net receipts. Remittances remain another backbone of external stability reaching US dollar 135.4 billion in 2024-25.
Diversified exports, healthy inward transfers and moderate external debt have collectively enabled India to navigate capital flow swings amid global supply chain disruptions, rising tariffs and geopolitical fragmentation. India has pursued an assertive strategy of trade diversification anchored in free trade agreements and interim trade pacts.
At a time when global trade weakened in 2025, India expanded its external engagement rather than retreating behind the veil of protectionism. The government fast-tracked and concluded several major FTAs with UK, Oman, New Zealand, the European Union and the USA.
What is remarkable in these trade agreements is, as the Prime Minister has recently described, a paradigm shift in India's trade policy. India is now negotiating trade agreements with major advanced economies from a position of strength and confidence.
Illustratively, the India-EU free trade agreement is a landmark next-generation partnership which unlocks unprecedented market access and places India in the central circle of global trade. The India-US trade agreement represents another major breakthrough sharply reducing the US tariff on Indian goods.
The new trade agreements together with India's broader diversification strategy into new markets and new products reinforce India's position as a key driver of global economic growth. Building block six relates to strong balance sheets of banks, corporates and households.
For over a decade, India had grappled with the twin balance sheet problem of stressed banks and overleveraged corporates. This made the financial system highly vulnerable to external shocks and India's banking and financial sector however have since staged a complete turnaround.
We are now witnessing a rapid transformation fueled by the so-called triple threat of progress, innovation, disruption, and the birth of entirely new business models. Let me repeat, we are now witnessing a rapid transformation fueled by the so-called triple threat of progress, innovation, disruption, and the birth of entirely new business models.
The democratization of credit, the revolution of digital payments, and the rise of fintech have turned what was once a rigid sector into a fluid and dynamic engine of growth. We are no longer just providing services. We are building the infrastructure of aspiration for 1.4 billion people.
Similarly, after a multi-year deleveraging cycle, Indian corporates now stand on much stronger financial footing. Balance sheets have been significantly cleaned up with reduced leverage, stronger profitability and markedly improved interest coverage ratios.
This renewed financial strength has enabled large firms to weather the global disruptions while positioning themselves for the next phase of investment and expansion. In fact, there are already visible signs of pickup in private investment cycle.
Indian households' balance sheets also remain equally resilient with household debt levels being far lower than those of major emerging economies. Further increase in household borrowings is being led by better rated customers who are prime and above.
Households also remain net financial asset holders. Supported by a surge in equity participation, retail investors have become a powerful pool of stable domestic capital symbolizing a cultural and structural shift towards long-term wealth creation.
The building block seven relates to digital public infrastructure, that is the India Stack. The infrastructure of 20th century India was defined by physical infrastructure. The 21st century infrastructure would be defined by digital public infrastructure, that is DPI, which is the India Stack.
This stack has become the global gold standard for how a nation can use technology to empower citizens. The Unified Payments Interface, that is UPI, now processes over 20 billion transactions per month accounting for nearly half of all global real-time digital payments.
The digital-first approach has moved beyond simple payments to transformative governance through Direct Benefit Transfer, that is DBT. DigiLocker has now more than 65 crore users underscoring seamless access of digital records across sectors.
With the world's cheapest data rates and over 950 million internet users, the focus has now expanded to Open Network for Digital Commerce, that is ONDC, and the Account Aggregator framework which are democratizing e-commerce and credit for millions of small businesses.
We are now witnessing the birth of what may be called the digital stack or the India Stack 2.0, the next generation of India's digital public infrastructure. This would be a more nuanced, intelligent, AI-driven and globally scalable evolution.
Leveraging over 57 crore Jan Dhan accounts, we are moving towards a frictionless financial future. Imagine a world where a voice-based conversational AI allows a farmer in a remote village or a street vendor in a tier-three town to authorize transactions without needing a smartphone or high-speed internet. This is the democratization of opportunity.
The building block eight relates to demographics, human capital and jobs. While the developed world grapples with an aging crisis, India is entering its prime with over 68% of population in the working age group and a median age of around 29 years. India possesses one of the youngest labor forces globally.
To harness this potential, initiatives such as the Skill India Mission and the Pradhan Mantri Kaushal Vikas Yojana were launched to improve employability. Measures are being taken to connect job seekers with employers and to remove practical barriers of entering the workforce.
The e-Shram portal has been launched to register unorganized workers. Women-centric livelihoods are being strengthened through the Deendayal Antyodaya Yojana. Together these initiatives reflect a shift from welfare employment to productivity-driven job creation. And this is a big transformation.
This is aimed at making India's workforce larger, more skilled and more formally integrated into the economy. The ninth building block which is the last and final building block that I would like to highlight relates to energy transition and green growth.
India's energy transition has reached a point where ambition is no longer the headline. Execution is. In June 2025, India achieved a landmark in its energy transition journey by reaching 50% of its installed electricity capacity from non-fossil fuel sources, more than five years ahead of the 2030 goal set by the Paris Agreement.
As of end 2025, the country's renewable energy capacity reached 258 gigawatt, more than tripling over the past decade. A reflection of sustained investment and policy support in solar, wind and other non-fossil fuel assets.
The country has simultaneously driven down power shortages to nearly zero. It's actually 1%. Even as demand has surged, a proof that clean energy is not just keeping up with India's growth, but in fact powering it.
Under the National Green Hydrogen Mission, the country aims to produce 5 million metric tons of green hydrogen annually by 2030. The scope for harnessing expanded nuclear energy has been enabled by opening the doors for the private sector.
India's energy transition is therefore no longer a climate story alone. It is a story of economic self-assertion, industrial competitiveness and strategic resilience in a world where energy has become the new currency of power. Let me now make some concluding observations.
Driven by the nine solid building blocks which I have explained earlier, India is mapping a future that is already arriving. Today we are not here to merely recount history. The world is coming to us because India is one of the largest and most exciting markets.
With our demographic strength, technological momentum, startup and AI ecosystem, stable macroeconomic framework and rising competitiveness, India is poised to define the economic narrative of the 21st century. There are several other building blocks like agriculture, tourism, healthcare and a few others which are also witnessing rapid strides but I have not touched upon them in the interest of time.
As we look ahead, one point stands very clear. India's growth story has become credible and the coming decade will not be one where India simply participates in global growth but one where India shapes it. A developed India, that is Vikshit Bharat, is not just a destination on a calendar. It is a commitment we make today for our future generation.
It requires us to be bold in our disruption and uncompromising in our pursuit of stability. We have to run a marathon and a sprint simultaneously, maintaining macroeconomic and financial sector stability while aggressively expanding the new frontiers of growth. I'll stop here. Thank you very much. Namaste.
