16th Finance Commission Chairman Arvind Panagariya on Saturday, 3 October 2026 said India has weathered global economic turbulence far better than anticipated, maintaining both strong growth momentum and stable inflation despite mounting geopolitical pressures. Panagariya made the remarks on the sidelines of the 5th Kautilya Economic Conclave 2026 in New Delhi.

Panagariya's Confidence in India's Growth Trajectory

Expressing conviction in the country's economic fundamentals, Panagariya said he believes India will sustain an annual growth rate of 7–8 per cent over the medium term. He acknowledged initial concerns when West Asia tensions flared, but noted that the economy's performance had been 'remarkably well' in spite of the headwinds.

'When tensions in the Middle East escalated, I initially felt the impact on India could be quite severe, but the economy has performed remarkably well,' he said.

He added that the combination of controlled inflation and sustained economic activity signals India's capacity to navigate a difficult global environment. 'With inflation remaining under control and growth momentum continuing, it shows that India has managed global instability much better than many had anticipated,' Panagariya said.

Manufacturing Emerges as a Key Growth Driver

Highlighting a structural positive, Panagariya pointed to the manufacturing sector as a standout contributor to the broader growth story. He noted that manufacturing growth has exceeded 10 per cent across the past three financial years — one of the strongest such runs since Independence.

He also argued that businesses typically build resilience against uncertainty, insulating the broader economy from sector-specific shocks. 'Uncertainties may affect one or two sectors, but they do not necessarily impact the entire economy. Some sectors continue to perform well and provide support to overall growth,' he said.

Finance Minister Sitharaman's Macro Snapshot

Earlier at the same conclave, Finance Minister Nirmala Sitharaman presented a broadly optimistic reading of India's economic scorecard. She noted that real GDP expanded by 7.8 per cent in the first quarter of FY2026-27, while consumer price inflation stood at approximately 4.8 per cent in August. The current account deficit was contained at just 0.5 per cent of GDP during the quarter.

Sitharaman credited institutional strengthening since 2014 for the economy's ability to absorb external shocks, saying the government had systematically built the capacities necessary for sustained long-term growth and development.

Broader Context and What It Signals

The remarks at the Kautilya Economic Conclave come at a time when several emerging markets have struggled with currency volatility, elevated inflation, and slowing growth in the face of global supply chain disruptions and commodity price pressures. India's relatively contained current account deficit and moderating inflation offer a contrasting picture.

Notably, this is not the first time India's macro resilience has drawn attention — similar assessments were made following the COVID-19 shock and the 2022 global inflation surge. Whether the current outperformance proves durable will depend significantly on the trajectory of crude oil prices, US monetary policy, and domestic consumption trends in the quarters ahead.