India is within striking distance of 8% economic growth, supported by favourable demographics, a large domestic market and structural reforms, Shaktikanta Das, Principal Secretary-2 to Prime Minister Narendra Modi in the Prime Minister’s Office, said on Tuesday.

Addressing the Business Standard BFSI Summit 2026, Das said India remained among the fastest-growing major economies and was projected to remain the fastest-growing economy over the next five years.

The International Monetary Fund has raised India's growth forecast for financial year 2026-27 to 7% from 6.4%, while projecting growth of 7% for 2027-28, Das said. India's real GDP growth averaged 7.9% annually in the post-pandemic period, while the economy expanded 7.8% in the first quarter of the current financial year.

Das said the global economy faced difficult crosscurrents, with geopolitical disruptions, trade barriers and sanctions weighing on the outlook. Energy-importing economies, particularly those outside the technology value chain, faced a difficult outlook amid global uncertainty.

He identified macroeconomic stability, structural reforms and strategic policy initiatives to strengthen domestic capacity in import-dependent sectors as three key drivers of India's growth.

BFSI sector priorities

Das said a sound, efficient and profitable banking, financial services and insurance sector would be crucial to India's ambition of becoming a developed economy by 2047.

The BFSI sector must pivot from simple lending towards capital formation, financing infrastructure, advanced manufacturing and other long-term investment needs, he said.

He called on financial institutions to take a leading role in green finance, including funding renewable energy infrastructure and green hydrogen projects.

The sector must also act as a catalyst for democratising financial inclusion by extending credit to underserved groups, including micro, small and medium enterprises and farmers, he said. Digital lending infrastructure and alternative data could help bridge credit gaps.

Das said municipal bonds must emerge as a key financing instrument for local bodies as urbanisation increases the demand for infrastructure and public services. Municipalities need stronger governance, accounting systems and institutional capacity to improve their access to capital markets. 

He also called for wider public issuance of corporate bonds and deeper retail participation to improve price discovery, broaden the investor base and provide households with additional investment avenues.

Households, corporates and retirement savings

Das said the household sector's financial position remained healthy, citing improvements in indicators of borrowing stress and a shift by banks towards borrowers with better credit profiles. However, he said household consumption-related borrowing needed careful monitoring.

Corporate balance sheets have strengthened, with improved debt-servicing capacity and higher interest coverage, he said. Sales growth among listed private non-financial companies accelerated in the first quarter of the current financial year, while operating margins improved across major sectors.

Pension sector reforms should be a key priority, Das said, calling for retirement coverage to expand beyond the formal sector. Pension funds could provide patient capital to support infrastructure and sunrise sectors while improving long-term retirement security and financial inclusion.

He also called for wider insurance coverage under the vision of Insurance for All by 2047, with efforts to improve affordability, distribution, digital access and awareness.

Das said regulators and financial institutions had an important role in fostering financial innovation with appropriate safeguards, including through regulatory sandbox frameworks.

He said India's progress towards Viksit Bharat would depend on a resilient and profitable BFSI sector capable of financing long-term growth despite turbulent global conditions.