She said that India is experiencing a “virtuous cycle of accelerated growth and macroeconomic stability”.
Delivering the 14th foundation day lecture at the Centre for Development Studies in Thiruvananthapuram on February 20, Gupta also stated that the economy is well supported by a robust and resilient banking sector and the rapid expansion of the non-banking space.
“The economy has become more resilient to some of the known shocks, both domestic and external, such as deviation in rainfall from long period average, other natural events, oil price shocks, decline in external demand or global policy uncertainty,” she said, adding that the strength of a large and well diversified economy is more apparent now and policy decisions are becoming more timely and nimble than ever before.
The central bank published a copy of the speech Tuesday.
Analysing India’s growth over the past four decades, Gupta said the economy has shown a sustained momentum and gradual acceleration with the average GDP growth rising to 7.7% between FY23 and FY26 from 6.6% in the previous decade. She pointed out that since the early 1990s, the economy has been growing much faster than the rest of the world, leading to a three-fold rise in India’s share in the global economy to 3.5% in 2024 from about 1.1% in 1991.
“The Indian economy is not just growing at an accelerated pace; it is also depicting enhanced macroeconomic stability which is reflected in a whole host of economic outcomes becoming steadier… Inflation has also shown visible and sustained signs of moderation and much reduced volatility,” she said.An economy is typically assessed to be macroeconomically stable if specific outcomes such as inflation, current account deficit, fiscal deficit, quality of public debt and deficit are seen to be sustainable, growth supportive, and not indicative of excessive underlying risks or overheating.
“For India, most of these indicators have remained in a healthy range over the last four decades with notable improvement in recent years,” Gupta added.
She pointed out that inflation has moderated over time and has declined relative to other countries, and attributed the resilience of India’s current account deficit to its diversified sources of inflows, which have only strengthened over time.
She said the Indian economy has achieved more insulation from sharp increases in global oil prices. The oil intensity of GDP (consumption of oil per unit of GDP) has been declining consistently. This, according to her, is expected to persist as the Indian economy transitions towards more focus on renewable energy and improved overall energy efficiency.
Another important aspect of India’s growth story is the acceleration in per capita income growth, which has been faster than in GDP growth. From a modest level of $274 in 1981, and $306 in 1991, India’s per capita income has increased nearly 10-fold to about $2700 in 2024, she said, attributing it to the decline in population growth.
“India’s population growth has traditionally been significantly higher than that of the world. However, over the years it has declined at a faster rate than the global rate and, since about 2014, at par with the growth rate in world population,” she observed.
She dubbed the improvement in the health of the banking sector as “dramatic” and said Indian banks at present are structurally in a better shape relative to their peers in many other countries with visible improvement in key financial ratios. The capital to risk-weighted assets ratio of scheduled commercial banks rose to 17.2% in September 2025, comfortably above the regulatory minimum, while asset quality improved markedly to multi-year highs. The gross non-performing asset (GNPA) ratio declined to 2.1% in September 2025 from 2.5% a year earlier and is much below the 5% seen in the previous two decades.
“Taken together, at the current juncture, a robust and resilient banking sector and the rapid expansion of the non-banking space are providing the favourable preconditions for the domestic financial system to adequately support the ‘Viksit Bharat’ 2047 objectives,” Gupta noted.