Informist, Monday, Aug. 25, 2025

--RBI Malhotra: India econ symbol of resilience, hope
--CONTEXT: RBI Governor Sanjay Malhotra speaking at FIBAC 2025 in Mumbai
--RBI Malhotra: India econ characterised by robust macroecon fundamentals
--RBI Governor Malhotra: All set to become 3rd largest econ
--RBI Governor Malhotra: Indian govt fiscal position very strong
--RBI Malhotra: Flexible inflation targeting brought dn CPI in last 10 yrs
--RBI Malhotra: Corporate balance sheets very healthy
--RBI Governor Malhotra: India external sector very comfortable
--RBI Governor Malhotra: We have robust forex reserves
--RBI Governor Malhotra:Now at critical juncture as we head to global issues
--RBI Malhotra: Need to push frontiers of growth in face of global challenges
--RBI Malhotra: Proactive policies by RBI, govt contained CPI in last few yrs
--RBI Governor Malhotra: Supply side steps, monetary policy helped with CPI
--RBI Malhotra: Not lost sight of objective of growth
--RBI Governor Malhotra: Will continue monetary policy with focus on growth
--RBI Malhotra: Monetary policy will maintain price stability
--RBI Malhotra: Monetary policy will keep in mind growth objective
--RBI Malhotra: Urge industry to invest boldly in entrepreneurial spirit
--RBI Malhotra: Been proactive in betterment of growth

MUMBAI – The Reserve Bank of India's Monetary Policy Committee will continue to prioritise growth, especially in the wake of rising global tensions, while ensuring price stability, the central bank's Governor Sanjay Malhotra said Monday. His comments assume significance against the backdrop of looming threats from tariffs announced by the US, with the entire 50% set to hit Indian exports from Wednesday. The Monetary Policy Committee will continue to keep in mind the growth objective while anchoring inflation, Malhotra said.

"We are now at a critical juncture as we navigate the choppy global economic environment characterised by heightened trade uncertainty and persisting geopolitical tensions. We need to push the frontiers of growth, we all must step up our efforts to address emerging challenges and at the same time seize the opportunities that are coming our way," Malhotra said at FIBAC 2025 event organised by the Federation of Indian Chambers of Commerce and Industry and Indian Banks' Association.

The MPC has already cut the repo rate by 100 basis points so far in 2025 to 5.50% in order to support growth. India is currently at a crucial juncture as it is heading into geopolitical challenges, Malhotra said.

"The Indian economy also has expanded many folds. It continues to be a symbol of resilience and hope. The achievements of the Indian economy, despite unprecedented challenges in the last few years, are undoubtedly very credible and widely recognised," Malhotra said. "The Indian economy today is characterised by robust macroeconomic fundamentals," he added.

The RBI has projected India to grow at 6.5% in 2025-26 (Apr-Mar). The tariff announcements by the US, which is India's top export destination with a one-fifth share in total outbound shipments, pose substantial risks to India's external sector demand and growth. Economists have already projected a downward revision of 20-30 basis points to GDP growth for the current financial year.

Notwithstanding the risks, Malhotra said India is set to become the third largest economy. This growth is supported by lower inflation, the governor said. "The inflation at the same time, over the last decade, especially after the inflation targeting framework was introduced, has been very reliant, much lower than what it used to be earlier at 4.9% per annum," he said.

This framework is now up for a review, with the RBI only last week inviting comments which will then be internally assessed by the central bank and sent to the finance ministry for a final decision. In its review, the RBI is evaluating whether the monetary policy will continue to have a particular inflation target, whether there will be an inflation targeting band, and whether the MPC should target headline inflation or core inflation.

To give support to growth, Malhotra said that the Indian government's fiscal position is also very strong and robust, having decreased its fiscal deficit, from 9.2% post-Covid and projected to go down now to 4.4%. While disruptions and geopolitical tensions could have significantly stopped inflation easing, proactive policy measures by both the RBI on its part and supply-side measures by the government have helped contain the generalisation of price pressures, he said. "Anchoring inflation expectations to help support stable consumption patterns and improve investor confidence," he added.

Given these domestic conditions, Malhotra urged the banking industry to invest boldly in entrepreneurial spirits which will help drive growth in the economy especially because corporate balance sheets are very healthy. Additionally, the governor also said that the banking industry must improve financial inclusion and customer service to further improve credit in the economy.

The governor also said India's external sector is comfortable with high foreign exchange reserves, adequate to cover imports for 11 months. End

Reported by Priyasmita Dutta and Kabir Sharma

Edited by Vandana Hingorani

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