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Informist, Friday, Jun. 6, 2025

--RBI Malhotra: COVID is not a matter of concern right now

NEW DELHI - The Reserve Bank of India Governor Sanjay Malhotra Friday said that there is no "meaningful" adverse impact from India's recent conflict with Pakistan, even though briefly there was an impact on economic activities in the northern region. "The conflict was a skirmish and had a very very limited, negligible impact on the economy," the governor said. 

Malhotra noted that during the time of the conflict between the two nuclear-powered neighbours, air passenger traffic did certainly decrease but there was no major supply chain disruption. "Prices of few things in those regions had gone up but it has all normalised, it does not have any meaningful or major impact on the economy," Malhotra said at the post-monetary policy press conference. 

The RBI's Monetary Policy Committee, earlier in the day, unexpectedly lowered the policy repo rate by 50 basis points to 5.50% and also changed the policy stance to 'neutral' from 'accommodative'.

"The near-term and medium-term outlook now gives us the confidence of not only a durable alignment of headline inflation with the target of 4%, as exuded in the last meeting but also the belief that during the year, it is likely to undershoot the target at the margin," Malhotra said in his statement. "Growth, on the other hand, remains lower than our aspirations amidst challenging global environment and heightened uncertainty."

Albeit limited, many analysts did expect some economic impact from India's conflict with Pakistan. Tensions escalated between New Delhi and Islamabad after Pakistan-based terrorists killed 26 people, mainly tourists, in Jammu and Kashmir's Pahalgam on Apr. 22. India launched Operation Sindoor in retaliation to the attack on May 7 and destroyed terrorist camps at nine locations in Pakistan and Pakistan-occupied Kashmir. This resulted in counter action by Pakistan. Both the sides arrived at an understanding to stop firing and military actions on May 10.

Governor Malhotra also said that the sudden spike in COVID-19 cases is not a matter of concern right now. "It is become just one of the viruses and hopefully it should stay like that," he said. 

When COVID-19 pandemic hit in 2020, the economy had gone for a toss, with India's GDP contracting 5.8% in 2020-21 (Apr-Mar). According to data from the health ministry, as of 0800 IST Friday, the total number of active COVID-19 cases in India totalled 5,364. RBI sees India's GDP growth at 6.5% in FY26.  End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Reported by Priyasmita Dutta

Edited by Vandana Hingorani

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