RBI Governor Sanjay Malhotra shares key insights on economy, business optimism for 2025. Here’s what he said 

Amid criticism from the Reserve Bank of India (RBI) of the government’s focus on controlling inflation rather than economic growth, newly appointed RBI Governor Sanjay Malhotra said on December 30 that India’s economy is expected to improve in 2025 due to strong growth. consumer and business confidence.

In the foreword to the Financial Stability Report, Malhotra highlighted the RBI’s commitment to maintaining financial stability, which it sees as essential to support sustainable growth in the Indian economy. on promoting a trajectory,” he said.

Malhotra also noted that despite global uncertainties, India’s economy is likely to pick up momentum in the second half of the current fiscal year. “Consumer and business confidence remain high and the investment climate looks promising as companies enter 2025 with strong balance sheets and healthy profits.”

In its November Economic Review, the Finance Ministry pointed to possible structural factors contributing to the slowdown in the first half of 2024-25. India’s GDP growth for the second quarter ending September 2024 fell to a seven-quarter low of 5.4 percent, bringing first-half GDP growth to 6 percent.

The slowdown, coupled with softening inflation, raises expectations that the RBI may cut its policy rate in the upcoming Monetary Policy Committee meeting.

Malhotra further emphasized that the financial sector regulators in India are advancing reforms and strengthening supervision. He highlighted the strength of the financial system, with strong earnings, low impaired assets and strong capital buffers. The results of stress tests show that both the banking sector , and non-banking financial companies (NBFCs) will maintain capital levels below the regulatory minimum, even in stressful scenarios.

“We continue to build and secure public trust by supporting India’s aspirations. We are committed to developing a modern financial system that is customer-centric, technologically advanced and financially inclusive,” he said.

As for the global economy, Malhotra acknowledged resilience in the face of significant challenges such as political and economic policy uncertainty, ongoing conflicts and fragmentation of international trade. As monetary policy becomes more supportive of economic activity, favorable financial conditions are expected to boost global GDP growth after a prolonged period of low growth.

While the outlook looks promising, Malhotra warned that medium-term risks remain, including potential escalation of geopolitical conflicts, financial market volatility, extreme climate events and rising debt levels. Additional uncertainties come from extended asset valuations, less regulated non-bank financial intermediaries from the vulnerabilities of financial intermediaries and challenges arising from emerging technologies.