Sakshi Gupta of HDFC Bank is cautiously optimistic on India's long-term growth story but warns investors not to buy the consumption narrative wholesale — it is far more fragile than the headlines suggest.
India's growth story is resilient. It is also incomplete. That was the nuanced verdict from Sakshi Gupta, Principal Economist and Vice President at HDFC Bank, speaking at the ET Alpha Wealth Summit's panel on the durability of India's economic expansion.
Her score for India on a growth durability scale of 1 to 10: a 6 today, with room to move higher, but only if the country does the hard structural work ahead.
Gupta was part of the panel discussion on the topic 'India's Growth Story: How Durable it is?at the ET Alpha Wealth Summit in Mumbai last week. Along with Gupta, the panel included Garima Kapoor, Deputy Head of Research and Economist at Elara Securities, Dr Aurodeep Nandi, India Economist & Executive Director, Nomura , and Dharmakirti Joshi of CRISIL. Deepak Ajwani, Editor, ET Digital, moderated the panel.
Why Gupta is more hopeful than most
Gupta opened with a point that often gets lost in the noise of global uncertainty. Despite oil price shocks, geopolitical disruptions, and volatile capital flows, India's GDP growth has held above 7% for three consecutive years. That consistency, she argues, deserves more credit than it typically receives.
Her potential growth target is around 7.5% - achievable, she believes, if India can build the diversification and resilience that would push its durability score meaningfully upward over the next five years.
The private investment picture is more complex than it looks
When asked why private capital expenditure appears hesitant, Gupta offered a more textured answer than the usual bearish narrative. At the aggregate level, India's gross fixed capital formation stands at around 32% of GDP, a reasonable number. And in several sectors, new capacity additions are being led by the private sector, not the government.
The problem is one of scale. For an economy of India's size and ambition, the absolute level of private investment still falls short of what is needed. Part of the explanation is global rather than domestic: sectors like steel and cement have been hit by a wave of Chinese overproduction that has depressed prices and squeezed profitability across Asia. "China is exporting deflation to the rest of Asia," Gupta noted — a constraint that no amount of domestic policy can fully offset.
Will FII money come back?
On foreign institutional outflows, including a single day when ₹21,000 crore left Indian markets, Gupta is carefully hopeful rather than confident.
She acknowledged two headwinds. India lacks a compelling AI narrative for global capital allocators. And the rotation trade that boosted India's MSCI weighting when China fell out of favour has now partially reversed, with China's narrative recovering despite its structural challenges.
That said, Gupta believes a significant amount of bad news is already priced into Indian equities. Once geopolitical anxieties around West Asia begin to ease, she expects some capital to return. Her larger point: India obsesses over portfolio equity flows, but consistent foreign direct investment and other longer-duration capital remain more stable than the daily headlines suggest.
The warning investors need to hear
Asked where investors are currently too optimistic, Gupta's answer was pointed: the consumption story.
India's consumer is frequently presented as a monolithic, unstoppable growth engine. Gupta's view is more cautious. Indian consumers are price-sensitive, and consumption can turn vulnerable quickly when inflation rises or monetary policy tightens. The opportunity within consumption is real, but it is selective, not broad-based. Buying the theme indiscriminately, she implied, is a mistake many investors are currently making.
India at 6 out of 10 is a solid foundation. But turning it into an 8 requires clearer thinking — about investment, about AI, and about which consumer bets actually hold up under pressure.
