India’s economic strength built on reforms, governance: Shaktikanta Das

Shaktikanta Das, Principal Secretary to Prime Minister Narendra Modi, on Sunday said India’s economic growth was not a matter of chance and that the resilience of the economy stemmed from strong domestic demand and a favourable investment climate, supported by fundamental reforms undertaken over the past 12 years.

Das said rising global uncertainty was likely to prompt central banks worldwide to adopt tighter monetary policies, which could weigh on global growth.

The global economy is currently marked by conflicts, divisions, unilateral actions, technological restrictions, fluctuations in energy prices and rising inflation. The interplay of these factors is creating uncertainty and could impede global growth, he said.

“What is expected next is tight monetary policies from the central banks,” Das said while speaking at the Kautilya Economic Conclave in Delhi.

He also flagged elevated public debt in several advanced economies, which averages around 110 per cent of their GDP. This, he said, was leading to higher bond yields and reducing fiscal flexibility, limiting governments’ ability to respond to current and emerging challenges.

“Despite this global situation, India’s real GDP increased by 7.8 per cent in the first quarter of the ongoing financial year, fuelled by robust domestic demand and investment conditions,” he said.

Das said the measures undertaken over the past decade were not isolated interventions but part of a broader effort to strengthen the foundations of the economy.

“The unique aspect of India’s development path over the past 12 years has been the steady establishment of governance structures prior to the onset of the crisis,” he said.

He said several reforms introduced over the past decade were designed as safeguards to help the economy withstand disruptions and recover quickly.

“I would classify flexible inflation targeting, GST, a significant push for digital payments, and banking reforms under this category. Therefore, India’s strength is not by chance. It results from extensive reforms,” he said.

“Enhancing governance and state capability, establishing macroeconomic stability, and developing India’s long-term productive capacity are the main concepts of resilience in the Indian economy,” Das added.