India's oil imports, external finance remain key challenges: RBI Dy Guv

India's dependence on imported oil and external finance remains a challenge, Reserve Bank of India (RBI) Deputy Governor Poonam Gupta said at the Business Standard BFSI Insight Summit 2026.

Speaking to Business Standard's A K Bhattacharya during a fireside chat, Gupta said that while India has become more resilient to several economic shocks, reducing its exposure to external risks will remain important for sustaining growth. She added that India had made significant progress in managing food-related challenges, but fuel and external finance continued to pose concerns.

On fuel, Gupta said she had earlier believed India had become less dependent on imported oil and was therefore less exposed to oil-related shocks. “But this time around, oil shock has persisted for many months, and it's not just the price. Availability too was a challenge,” she said.

Gupta said the challenge had been handled well through a coordinated, system-wide approach. Looking ahead, she expects similar shocks to have a smaller impact on India and other countries as supply chains diversify, buffers increase, and the shift from fossil fuels to renewable energy accelerates.

On food availability, Gupta said India was not facing concerns over food availability or prices, given the strong performance of the agriculture sector. The sector has been growing at a steady rate of 3-4 per cent while undergoing significant transformation. She said these changes were not being discussed comprehensively enough.

India was increasingly becoming a food exporter, she said, adding that even the challenges posed by El Nino this year were being managed well.

Addressing concerns that advances in artificial intelligence (AI) and technology could lead to jobless growth, Gupta said technological progress and high employment had coexisted in prosperous economies.

She said the nature of jobs changed with technological advancement, creating new opportunities that workers had to adapt to.

“Households actually are the best adapter of that,” she said.

Gupta said India should focus on improving the quality of jobs and creating new opportunities through exports of goods and services, as well as the movement of skilled workers to other countries. She said India had a strong labour force but could do more to meet global demand for skilled workers, particularly as technology advances and populations age.

“Technology eating up jobs hasn't happened historically, and it is unlikely to happen now,” she said.

On the micro, small and medium enterprises (MSME) and unorganised sectors, Gupta said credit growth and the economy's resilience offered indications that smaller businesses were adapting to economic shocks.

She said the volume and quality of credit to the sector had been encouraging. The broader resilience of the economy also suggested that smaller businesses were coping with challenges related to inflation, global financial conditions and fuel.

Gupta credited the sector's innovation, efficiency and ability to adapt, while clarifying that her assessment was based on her overall reading of the economy rather than a specific survey or dataset.

In her address at the summit, Gupta highlighted the rise in global public debt and the persistence of economic shocks since the Covid-19 pandemic. Around 120 countries had higher public debt in 2025 than in 2020, as governments had expanded spending during the pandemic but had not subsequently reduced it, she said.

Global public debt stood at 94 per cent of gross domestic product (GDP) in 2025 and is projected to cross 100  per cent in 2030, reaching nearly 102 per cent in 2031, she said.

Despite these pressures, the International Monetary Fund (IMF) has continued to revise its global growth forecasts upwards. It projected global growth of around 3.1 per cent in 2026, with gains unevenly distributed across countries, she said. Investment in AI was supporting growth in several advanced and emerging economies, while countries heavily dependent on imported oil were facing greater pressure, she added.

She also highlighted the role of stronger household and corporate financial buffers, improved policy frameworks and central bank credibility in helping economies absorb shocks. Businesses had adapted to trade barriers by finding alternative markets and diversifying their sources of imports and exports, she said, noting that India had followed a similar approach.

However, she warned that prolonged conflicts involving Russia and Ukraine and in West Asia, higher commodity prices, extreme weather events, rising borrowing costs in advanced economies and renewed trade tensions could weigh on the global economy.

On India's domestic market, she said that economic diversification, broad-based growth and rising productivity had helped it withstand shocks, including high US tariffs, higher oil prices, deficient monsoon rainfall and capital outflows as global investors shifted towards AI-related assets.

Gupta said policymakers should prioritise medium- and long-term solutions rather than short-term fixes. She also highlighted the risks to inflation from oil prices, higher shipping, logistics and insurance costs, and AI-related investment. The IMF projected global headline inflation at 4.7 per cent in 2026, up from 4.1 per cent in 2025, while India's inflation was projected to rise from 2 per cent to 5 per cent.

She said policymakers might need to take preventive measures before risks fully materialised, while noting that it was too early to assess AI's overall impact on inflation and monetary policy.