Aman Sinha
A storm is perhaps the most unforgiving examiner in economics. It sets the same paper for every economy at the same time and leaves little room for excuses. The past thirteen months have been such an examination — marked by steep US tariffs on major trading nations, an oil shock, disruption around the Strait of Hormuz and supply-chain pressures across the world.
Yet the test was arguably toughest for India. The tariff wall was particularly high for the country, while the oil shock carried an outsized risk because India imports nearly 90 per cent of its crude. The Hormuz chokepoint also lies astride vital energy and trade routes.
Now consider the report card. Germany recorded 1 per cent growth, Japan around 0.5 per cent, Britain 1.2 per cent, the US 2.1 per cent and China 4.3 per cent. India, meanwhile, recorded 7.8 per cent growth — nearly twice China’s pace and close to four times that of the US.
The storm hit India hard. India still accelerated
India did not merely withstand the turbulence; it accelerated. GDP growth rose from 6.9 per cent a year earlier to 7.8 per cent, exceeding the Reserve Bank of India’s projection of 7 per cent.
The strength was broad-based. Manufacturing expanded 9.2 per cent, services 10 per cent, consumption 7.1 per cent and investment 11.9 per cent. For decades, India was often described as an economy forced to choose between manufacturing and services. The latest numbers tell a different story: both engines are expanding strongly.
Foreign investment data also underline the confidence in the Indian economy. Gross inflows reached $30.7 billion, described as the strongest in at least 15 years of Reserve Bank records, while net inflows rose 64 per cent. Gross inflows indicate interest; sustained net inflows indicate conviction.
Twelve years: From ‘Fragile Five’ to the world’s fourth-largest economy
India’s economic transformation is even more striking when viewed over a longer period.
In 1991, an oil shock severely strained the country’s external finances. As recently as 2013, India was counted among the so-called ‘Fragile Five’. Today, it is the world’s fourth-largest economy and is moving closer to third place.
The past decade has also witnessed major structural changes. Twenty-five crore people have reportedly moved out of multidimensional poverty, while inflation has remained considerably lower than the near-double-digit levels seen when the present government assumed office. Foreign exchange reserves have more than doubled, and a significant share of the foreign investment attracted since liberalisation has arrived during the past 12 years.
India has also emerged as the global leader in real-time digital payments, with close to half of such transactions taking place in the country.
The India once described as fragile now presents a different picture — robust, resilient and resurgent.
Good fortune fades. Good decisions endure
The argument is that these outcomes are not merely the result of favourable circumstances but also of policy decisions taken over several years.
As external pressures intensified, the Narendra Modi-led government simplified and reduced GST rates to support domestic demand. Public capital expenditure on roads, railways and ports was maintained, while efforts continued to secure energy and critical inputs despite turmoil in West Asia. New trade agreements, including those with Britain and Europe, have also been pursued as global trade conditions became more challenging.
The foundations for this resilience, however, were laid well before the latest crisis.
The inflation-targeting framework was institutionalised. The Insolvency and Bankruptcy Code helped address stressed assets and strengthen the banking system. GST created a more integrated national market. Jan Dhan accounts, Aadhaar and mobile connectivity expanded direct welfare transfers and helped create the infrastructure supporting digital payments. Make in India and production-linked incentive schemes sought to strengthen domestic manufacturing, while highways, freight corridors and ports expanded the country’s physical connectivity.
The central argument is simple: decisions taken years before a crisis often determine how well an economy performs when the crisis arrives.
Rahul Gandhi’s economic warnings versus India’s growth story
The author also takes aim at Congress leader Rahul Gandhi, who has repeatedly warned of severe economic trouble and, more recently, described an impending “economic tsunami”.
The latest growth figures, the author argues, stand in sharp contrast to that pessimistic assessment.
Prime Minister Modi, in his response to the growth figures, spoke of those “mired in the abyss of pessimism” and credited the result to the collective strength of the country.
The political disagreement, however, goes beyond competing economic assessments. The author argues that repeatedly forecasting economic collapse amounts to undermining confidence in India itself and says the Opposition’s pessimistic narrative has been rejected both politically and by economic data.
A milestone, followed by another target
Prime Minister Modi’s response to the growth figures was also presented as a call for continued effort rather than a victory lap. He described the performance as a reflection of “our collective strength” and urged citizens to maintain the momentum, deepen self-reliance, support Swadeshi products, promote domestic manufacturing and work towards an Atmanirbhar Bharat.
The larger objective is Viksit Bharat by 2047, when India marks 100 years of Independence.
That places the latest growth number in a broader political and economic narrative: the immediate achievement is significant, but the stated ambition is far larger.
Reform by conviction
The government has also highlighted deregulation and institutional reforms as part of its economic strategy. More than 1,500 obsolete laws have reportedly been repealed and over 40,000 compliances removed, with the stated objective of making governance and business easier.
Further reforms are expected, with the potential to expand economic capacity and productivity.
The Reserve Bank of India has projected full-year growth at 6.7 per cent. Based on the latest quarterly performance, the author argues that the balance of risks could now be tilted towards an upside surprise.
The verdict
For thirteen months, the global economy has faced an extraordinary combination of tariffs, energy disruptions and supply-chain pressures. India, despite its particular vulnerabilities, has posted one of the strongest growth performances among major economies.
The central lesson is that economic resilience is rarely built during a crisis. It is built in advance — through institutions, infrastructure, investment, reforms and policy continuity.
Storms do not flatter. They measure.
And, on the evidence presented here, India has emerged from this one with a growth rate of 7.8 per cent.
The author is a Senior Advocate practising in the Supreme Court of India.
September 2, 2026
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