Economic Resilience, Thinner Buffers, Emerging Risks Globally: Where Does India Stand? [1] - Address by Dr. Poonam Gupta, Deputy Governor, Reserve Bank of India, at the Business Standard BFSI Insight Summit -

Economic resilience is an economy’s ability to withstand shocks and continue expanding. The shocks may include wars, trade tensions, expensive borrowing, energy disruptions or extreme weather. It matters because resilience protects jobs, incomes and investment while giving policymakers time to respond.

The article links recent resilience to several buffers. Households and firms received large pandemic-era fiscal support. Many locked in longer-term borrowing at fixed rates before interest rates rose. Stronger policy frameworks also helped, including credible central banks, flexible exchange rates and improved fiscal and financial policies.

The results have exceeded expectations. Global growth is projected at 3.1 per cent in 2026 and 3.4 per cent in 2027, despite accumulated shocks. Yet resilience is not unlimited. The article warns that fiscal space has been used and that the margins for adjustment are narrowing.

The IMF projects global growth of 3.1 per cent in 2026 and 3.4 per cent in 2027. These rates are below the pre-pandemic average of 3.7 per cent, but they still show surprising durability after repeated shocks. India’s projection for 2026-27 was upgraded by 0.6 percentage point to 7.0 per cent.

That pace is much stronger than the projections for other large groups and economies. Emerging market and developing economies are projected to grow 3.7 per cent in 2026. Advanced economies are projected at 2.1 per cent, while the United States is unchanged at 2.3 per cent. The article does not provide separate Indian figures for 2026 and 2027.

India therefore stands out as a high-growth economy in the global outlook. Its 7.0 per cent projection is nearly three times the US projection and substantially above the world, advanced-economy and EMDE rates. The comparison supports the article’s emphasis on India’s resilience.

Global growth has remained stronger than expected because several protective forces worked together. Households and firms entered the latest period with financial cushions. Better policy frameworks also strengthened confidence. Credible central banks helped contain inflation expectations, while flexible exchange rates absorbed external pressure.

The article gives several examples of adaptation. Tariffs were lower than first announced, and firms found ways around trade barriers. AI investment increased demand for data centres and computing equipment. Oil producers outside the Gulf raised output, inventories were released, and lower energy use reduced the effect of the Strait of Hormuz disruption.

These forces help explain why actual growth exceeded IMF forecasts in each of the past three years. The IMF estimates that the Strait’s closure would reduce 2026 global growth by 0.3 percentage point, rather than 0.9 percentage point under less flexible energy conditions. Resilience remains vulnerable to new shocks.

The article establishes that India is expected to grow strongly, but it does not explain that performance through separate data on private consumption, investment, exports, demographics or structural reforms. It only states that India’s 2026-27 projection was upgraded by 0.6 percentage point to 7.0 per cent.

The broader explanation offered for emerging-market resilience includes better policy frameworks. These include more independent central banks, improved monetary-policy implementation and more flexible exchange rates. The article also points to financial cushions, accommodative financial conditions and fiscal stimulus in 2025. Those factors describe the wider context, not a complete India-specific growth breakdown.

Therefore, the supplied text cannot support a precise ranking of India’s growth drivers. A fuller answer would require additional evidence on consumption, capital formation, exports, population trends and reforms. The defensible conclusion here is that India’s forecast is strong, while its detailed composition is not provided.

Fiscal buffers are the financial room governments have for supporting the economy, cutting taxes or helping households during a shock. Thinner buffers mean that room has become smaller. A government with less fiscal space may find it harder to respond to war, recession, natural disasters or financial stress without creating new debt concerns.

The article says large fiscal support during the pandemic cushioned households and firms. It also says fiscal stimulus supported activity in 2025. These measures helped sustain demand, but they used part of governments’ available room. The article warns that resilience so far has relied on governments drawing on their fiscal space.

Rebuilding fiscal space would make future responses more credible and effective. It would also reduce dependence on emergency borrowing when interest costs are high. The warning is timely because the article describes risks as tilted downward and says that “the margins of adjustment are narrowing.” The supplied excerpt does not specify how governments should rebuild buffers.

The article identifies several downside risks to the global outlook. A wider or longer conflict in West Asia or Ukraine could raise commodity prices. Renewed trade tensions could weaken commerce. Extreme weather, worsened by El Niño, could disrupt activity. Higher long-term borrowing costs in major advanced economies could also restrain demand.

The energy example shows the mechanism clearly. The near closure of the Strait of Hormuz is estimated to reduce 2026 global growth by 0.3 percentage point. The hit would have been 0.9 percentage point if oil supply were less flexible and energy use less efficient. A conflict-driven supply shock can therefore damage output while raising energy costs.

The article also warns that a reassessment of AI gains could hurt investment. Data centres and computing equipment have boosted demand before visible productivity gains appeared. If that investment corrected, growth could weaken. The excerpt does not quantify the resulting inflation effect, but commodity disruptions would normally increase price pressure.

External shocks can quickly damage an economy through inflation, capital outflows, currency pressure or weaker demand. Sound policy frameworks reduce those effects by making government and central-bank actions more predictable. Confidence matters because households, firms and investors are more likely to keep spending and investing when institutions are trusted.

The article highlights credible central banks, better monetary-policy implementation and greater central-bank independence. These features help keep inflation expectations in check. Flexible exchange rates can adjust when global conditions change, absorbing part of the shock instead of forcing all pressure onto domestic output or reserves. Improved fiscal and financial frameworks add further protection.

The IMF estimates that institutional improvements explain slightly more than half of emerging markets’ better output performance during global risk-off episodes. Favourable external conditions explain the rest. These foundations do not prevent shocks, but they improve adjustment. Their value is especially high now, as the article warns that fiscal space is being drawn down and adjustment margins are narrowing.