India’s economy has achieved a “well settled equilibrium of resilient growth” despite global uncertainties, Reserve Bank of India governor Sanjay Malhotra said on Friday, crediting the nation’s strong macroeconomic fundamentals built over decades.
Speaking at the Kautilya Economic Conclave in New Delhi on ‘Central Banking in Turbulent Times’, Malhotra highlighted India’s robust position with forex reserves exceeding $700 billion, low inflation since February, a narrow current account deficit, a credible fiscal consolidation path, and strong balance sheets among banks and corporates.
“This is to be attributed to the steadfast attention to ensuring microeconomic stability, price stability, financial stability, and even policy stability,” he said. The governor credited continuity in reforms momentum and adoption of global best frameworks tailored to India’s needs, calling it the combined effort of governments, policymakers, regulators and regulated entities.
The remarks came two days after the RBI on Wednesday upwardly revised its growth projections for the current financial year to 6.8% from 6.5% estimated in August. The central bank also lowered its inflation forecast for 2025-26 to 2.6% from 3.1%, citing goods and services tax rate rationalisation and an above-normal monsoon.
“All in all, despite recent odds, the economy seems well settled into an equilibrium of resilient growth. There is quite a feat for a larger emerging market and makes India stand out as an anchor of stability in a volatile world,” Malhotra said.
{{/usCountry}}“All in all, despite recent odds, the economy seems well settled into an equilibrium of resilient growth. There is quite a feat for a larger emerging market and makes India stand out as an anchor of stability in a volatile world,” Malhotra said.
{{/usCountry}}On global economic challenges, the governor noted that uncertainties such as US reciprocal tariffs had not completely disrupted the world economy. “Despite higher US import tariffs, trade restrictions and uncertainties, the global economy has stayed surprisingly resilient till now,” he said.
“Even though uncertainty has become a pervasive element of contemporary discourse, its tangible effects on real economy, thus far, have been muted. We have more to see as to how it unfolds,” he added.
However, Malhotra cautioned that the global economy would perform below its true potential for some time due to diverging growth trajectories across economies. “Moreover, the current trade policy environment and restrictions could damage, perhaps permanently, growth in some economies,” he said.
The governor flagged fiscal stress as a critical risk factor, noting that almost every country was stretched. “It is not apparent how the situation could be normalised, especially if the world goes into a phase of lower economic growth. This is the risk for all of us, particularly when it is not accompanied by high inflation,” he said.
Though some large economies still have inflation above target, he noted it was not too high. In all likelihood, tariffs combined with large and stretched public debts almost everywhere in the world will have material impact on respective economies and the global economy, he warned.