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Informist, Tuesday, Dec. 23, 2025

NEW DELHI – Reserve Bank of India Governor Sanjay Malhotra is confident that the private investment in India will rise moving ahead. However, the governor said, the growth in private investment will not be as high as it used to earlier.

"Capital intensity of our economy is actually decreasing because capital is becoming more productive, more efficient," Malhotra said in an interview with India Today. "There is a shift of the composition of our economy towards services sector, which is growing and which is less capital intensive. So, growth in private investment will not be as high as it used to be earlier."

Private investment has lagged for several years in India while government capital expenditure has risen multi-fold, especially after the COVID-10 pandemic, to support economic growth. Policymakers have said in recent times that the economic environment is conducive for private investment to pick up.

Some sectors that earlier used to witness capital expenditure by companies are also changing, the governor said. "If you look at the power sector as an example, we were in a deficit situation. So to meet the deficit, the capital requirements would obviously have been much more. We are now more or less in a self-sufficient situation, having met the deficit," Malhotra said.

Growth in investment in such sectors will not be "as high", Malhotra said. There are, however, new sectors--such as renewable energy, defence equipments, and electronics--where we are seeing higher investment growth, he added. "There is a shift in terms of sectors that we normally would have otherwise tracked for private investment."

There are, Malhotra said, positive signs for private investment improving such as good capacity utilisation, healthy balance sheets of corporates and banks, who are eager to lend to the real economy.

Malhotra said that the Indian economy is in a very sweet spot and is enjoying the "goldilocks" period of low inflation and high growth. While there are some external uncertainties, which are causing a "little bit of correction in growth", all sectors of the Indian economy are in a very good phase, the governor said. "That should help us in sustaining this momentum of growth going forward."

India's GDP grew 8.2 in the September quater, the highest in six quarters. GDP growth averaged 8% in the first half of FY26 but economic activity is projected to slow down. The RBI earlier this month raised its growth projection for 2025-26 (Apr-Mar) to 7.3% from 6.8%. 

The RBI's Monetary Policy Committee, despite high growth, lowered the policy repo rate by 25 basis points to 5.25% on Dec. 5, citing the low inflation trajectory. Malhotra said inflation should remain benign for a "longish" period of time, which would mean that "we are in for a long period of low policy rates". He added that monetary policy is in a neutral phase and the MPC will take actions based on incoming data moving ahead.

On the rupee's depreciation against the dollar, Malhotra said that some currency depreciation may help exporters but "it is not that we have made a conscious effort to let the rupee depreciate." The rupee fell to a record low of 91.08 a dollar last week but has since recovered and ended at 89.65 a dollar Tuesday.  End

US$1 = INR 89.65

Compiled by Shubham Rana

Filed by Akul Nishant Akhoury

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