Bill Clinton’s famous 1992 campaign quip, “It’s the economy, stupid”, has become a perennial refrain in democratic politics. It ends up meaning many things, of course. But the underlying message is clear: to the citizenry, which is also the electorate, the economy matters more than ideology.
No wonder that in India today, it echoes in a chorus of criticism portraying an economy in dire straits. Opposition voices, sections of the media and imported analytical frameworks paint a picture of collapse, stagnation and policy failure. Yet a dispassionate assessment reveals that India is not doing too badly.
Growth remains robust by global standards, inflation is largely contained and structural vulnerabilities, especially the oil shock caused by the Iran war, haven’t crushed us. Even when combined with capital flight, current account deficits and low foreign direct investment. My point is simple: let’s not overdo the doom and gloom. Instead, let’s turn this crisis into an opportunity. Yes, rather than chest-beating and ideological bashing, the current crisis should spur long-postponed reforms.
But first, let us look at the fundamentals. For fiscal year 2025-26, India’s real GDP growth has come in at 7.7 percent, with the January-March quarter accelerating to 7.8 percent. This positions India as the fastest-growing major economy in the G20, even amid global headwinds including US tariffs, supply chain disruptions and West Asian conflicts. Manufacturing, trade, transport and financial services have shown strong gains, underscoring momentum from domestic demand, services exports and continuity in reforms.
Inflation, too, remains manageable. Retail inflation stood at 3.48 percent in April 2026, with food inflation at around 4.2 percent, well within the Reserve Bank of India’s comfort zone. While wholesale price inflation has risen due to energy costs, the overall trajectory reflects prudent monetary policy and supply-side resilience.
Unemployment data further counters alarmist claims. The latest figures show the overall unemployment rate at 5.2 percent in April 2026, a modest uptick but still historically moderate. Rural and urban trends reflect stable labour force participation amid structural shifts toward formalisation. While challenges in job creation persist—particularly for the youth—macro indicators do not support claims of a job crisis.
Yes, we may be in for some harder times, with rising fuel, fertiliser and transportation costs, but once again, the situation is not as bad as prevalent not only in our immediate neighbourhood, but in many other parts of the world.
The genuine pressure points are identifiable and largely exogenous. An oil shock from West Asian conflicts has exposed India’s heavy dependence on imports, with crude oil requirements at 85-90 percent. And, flashing danger signals, once more, are our relatively modest strategic stocks. We should have built larger buffers when oil prices were low, as China did with its massive reserves approaching 1.4 billion barrels.
It is also true that we did not adequately ‘game’ scenarios like disruptions in the Hormuz Strait in our economic planning. Though petrol and diesel prices were not lowered significantly when oil was cheap, they can only offset present subsidies up to a point. This has widened the current account deficit, exacerbated by foreign portfolio investor exits amid global volatility and subdued foreign indirect investment flows. The rupee has faced depreciation pressures, pushing up import bills.
Yet, a cheap rupee will attract foreign money when the market down-cycle reverses. And it will also boost our exports, especially in software and IT services. Let us not forget that it is this sector of the economy that supports our upwardly mobile middle classes. A cheap rupee augments our major economic advantage and increases labour arbitrage, even if it makes foreign travel or study abroad that much more unaffordable.
What matters, then, in the current debates on the Indian economy, is context. It is context that makes the Clinton quote much more intelligible, even turning it on its head. India, let us not forget, has navigated such cycles before, often emerging with strengthened fundamentals, as in 1991. What is more, we are by and large, an economy fuelled by domestic consumption and savings. Even if the latter declines and our dependence on Chinese imports grows, we are unlikely to return to times when we have to sell our family heirlooms—read: gold—as a recent fake report claimed.
The current brouhaha, therefore, risks degenerating into partisan theatre. Denigrating the ruling dispensation and calling for heads to roll, as if every macroeconomic tremor were proof of political bankruptcy, is not how a mature democracy functions.
What India requires is not mere or more handwringing. Instead, long-awaited reforms must be expedited: accelerated deregulation, a genuinely business-friendly environment, and targeted reforms, especially the end of what has come to be known as “tax terrorism”. This includes retrospective taxing, unstable rules and business interests held hostage by enforcement officials.
Periods of stress have historically been India’s reform whip. The current oil shock and capital flow reversals offer precisely such an opportunity. Now is the time to strengthen ties with Europe, friendly Gulf countries such as the UAE and others, efforts such as those Prime Minister Narendra Modi has consistently pursued.
But the elephant in the room remains the United States. We must mend and deepen this relationship with clear-eyed pragmatism and transactional realism, setting aside any self-righteous or sanctimonious posturing. A lighter compliance burden, faster dispute resolution, energy diversification and predictable policies will advance Garib Kalyan and Viksit Bharat more effectively than rhetorical warfare.
So-called experts who frame every data point as a referendum on the ruling party overlook India’s deeper civilisational continuity: a remarkable capacity for synthesis, adaptation and democratic resilience that predates and will outlast any single administration.
Yes, it is the economy, stupid. But every crisis is also an opportunity.
The middle, also the sensible, path lies in acknowledging vulnerabilities without panic-mongering. Similarly, we should celebrate real strengths without sycophancy. Acting decisively and moving forward with fiscal prudence and well-thought-out strategies is the need of the hour.
And you don’t have to be a titled economist to understand that.
Makarand R Paranjape | RIGHT IN THE MIDDLE | Author and commentator
(Views are personal)
(Tweets @MakrandParanspe)