NEW DELHI: Restoring the health of India's banks and lenders has been the defining feature of the economy's resilience in recent years, Shaktikanta Das, Principal Secretary-2 to the Prime Minister and a former governor of the Reserve Bank of India, said on October 4.
"Restoration of the health of the financial sector has been the defining feature of India's resilience in recent years," Das told the Kautilya Economic Conclave in New Delhi, All India Radio reported. The financial sector, he said, had emerged as a strong pillar of growth, supported by reforms such as the Insolvency and Bankruptcy Code, the recapitalisation of banks and constructive regulatory oversight.
Das said gross non-performing assets, the share of bank loans that borrowers have stopped repaying, had fallen sharply to 1.68 per cent in June this year, and that bank profitability had improved significantly.
He also pointed to the external accounts. Prudent management of the external sector, he said, had supported macroeconomic stability, and India's external indicators had remained broadly resilient because of the continued diversification of exports, the conclusion of free trade agreements and a sustained surplus in services trade. The current account deficit for 2025-26, he said, was well within manageable levels at 0.6 per cent of GDP.
Das spoke as keynote speaker in a session titled "Kautilya and a Resurgent India: Lessons for Emerging Markets". The fifth edition of the conclave, organised by the Institute of Economic Growth in partnership with the Finance Ministry, ran from October 3 to 5 under the theme "Resilience in an Age of Flux", with more than 180 participants, over 80 of them from about 30 countries, DD India reported. RBI Governor Sanjay Malhotra was scheduled to give the special address at a plenary on "Central Banking in an Age of Flux", chaired by Jean-Claude Trichet, former president of the European Central Bank.
Earlier editions of the conclave were held under the themes "Redefining the Future" in 2022, "Navigating a World on Fire" in 2023, "The Indian Era" in 2024 and "Seeking Prosperity in Turbulent Times" in 2025.
On the sidelines of the conclave, Saurabh Garg, Secretary in the Ministry of Statistics and Programme Implementation, said the economy had kept its momentum after growing 7.8 per cent in the first quarter of 2026-27. Strong corporate performance and continued capital investment, including by the private sector, were among the key indicators, he said, and the momentum was reflected in recent upward revisions to India's growth forecasts by agencies including S&P Global Ratings and Fitch Ratings.
Asked about the tensions in West Asia and the oil price shock, Garg said government interventions, together with steps taken by households and the private sector, had helped limit the effect of external shocks on the economy.
The external sector is under strain at the moment, even with a small current account deficit. In the two weeks to September 25, India's foreign exchange reserves fell by $33.2 billion to $747.5 billion as the Reserve Bank sold dollars to steady the rupee, and foreign portfolio investors pulled a net ₹35,861 crore from Indian shares in September, according to data reported by All India Radio. High crude oil prices and US bond yields were behind both.
Das's argument was that reforms such as the insolvency law and the recapitalisation of banks, together with careful management of the external accounts, have left the economy better placed to absorb such pressure.
