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Poonam Gupta, Deputy Governor, Reserve Bank of India, indicated that India has likely encountered greater difficulties than many other emerging market economies over the preceding year and a half. While other nations experienced a selection of these challenges, India has been affected by all of them – concurrently and collectively. Regarding trade, the nation has faced among the highest tariff rates imposed by the US on any partner country, alongside considerable policy uncertainty. As a substantial net importer of oil, it has been notably vulnerable to disruptions in oil supply and price volatility. Given the significance of agriculture to the economy and its sensitivity to rainfall patterns, El Niño presents a potential risk to the sector this year. In contrast to developments in many other countries, artificial intelligence has not yet provided a significant impetus. Nevertheless, she observed that the economy has weathered these shocks with limited lasting impact, a resilience underscored by India’s superior growth relative to its comparators, contained inflation, a fiscal performance aligned with consolidation, and a financial sector exhibiting unprecedented strength.
Gupta emphasized that the Indian economy has demonstrated remarkable performance, despite facing numerous shocks. It is maintaining a robust growth trajectory of over 7 percent, characterized by broad spatial distribution, sectoral diversification, and enhanced productivity. A divergence persists between this economic reality and certain segments of the financial markets, largely due to the allure of immediate returns in alternative venues. She indicated that this discrepancy is expected to resolve itself in the near term. Policymakers will remain steadfast in their commitment to fostering accelerated and more sustainable expansion.
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