India's macro fundamentals strong, show notable improvement in recent years: RBI DG Poonam Gupta

Mumbai (Maharashtra) [India], February 24 (ANI) Most of India's key macroeconomic indicators have remained in a healthy range over the last four decades with notable improvement in recent years, said Poonam Gupta, Deputy Governor, Reserve Bank of India.
Addressing the 14th Foundation Day Lecture of the Centre for Development Studies (CDS) on Friday February 20, 2026 at Centre for Development Studies, Thiruvananthapuram, whose excerpts have been released by the RBI on Tuesday, she threadbare highlighted a few indicators where the country is doing well.

An economy is typically assessed to be macroeconomically stable if specific outcomes (commonly, inflation, current account deficit, fiscal deficit, quality of public debt and deficit, and those pertaining to the financial sector) are seen to be sustainable, growth supportive, and not indicative of excessive underlying risks or overheating.

Taking inflation as an indicator, she said inflation has both moderated over time and has become more stable, especially under the flexible inflation targeting regime.

Average annual CPI inflation in India has declined from close to 10 per cent in the 1990s to about 6 per cent a year in the subsequent two decades; to below 5 per cent in the last four years; and is likely to remain benign in the coming months.

Inflation, she said, has also declined relative to other countries.

Further, referring to current account deficit (CAD), the RBI DG said it has varied within a moderate range of 0.5-2.2 per cent of GDP since 1990, and has remained modest in recent years.

Compared to an average CAD of 1.4 per cent between 1980-81 and 2019-20, it has halved to an average of about 0.75 per cent of GDP in the last six years. "For most part, India's current account deficit is quite comparable to many of its emerging market peers," she said.

"The resilience of India's current account deficit can be attributed to its diversified sources of inflows, which have only strengthened over time. Services exports and remittances in particular have significantly contributed to the robust inflows. It is expected that the recently announced India-USA trade deal, India-EU free trade agreement (FTA) and the newly signed or prospective new trade agreements will further strengthen the current account," she added.

The move to a formal process to institutionalize fiscal discipline starting with the Fiscal Responsibility and Budget Management (FRBM) Act, 2003 has had a positive impact on macroeconomic management and has helped build resilience.

Two additional noteworthy features of the Government finances that stand out in the recent period are the fiscal consolidation, accompanied by an improvement in the quality of expenditure -- with the share of capital expenditure in overall expenditure seeing a dramatic increase in recent years, she said.

She noted that even though revenue receipts of India remain somewhat lower than in many other countries, there are signs of an improvement in direct tax revenue collections of late, with a focus on widening tax base while also progressively rationalising the tax structure.

"Together, these developments - accelerated growth, moderation in inflation and its lower volatility, moderate and stable current account deficit, consolidation of public finances - underscore the broad-based nature of India's macroeconomic stabilization," the RBI DG said.

She also took note of overall GDP growth, rise in per capita income, and stable population in India. (ANI)