Amid the intensifying global tariff war, Reserve Bank of India Governor Sanjay Malhotra has affirmed that the central bank is closely monitoring international developments and will remain ‘agile and proactive’ in its policy responses.
Speaking at the 24th FIMMDA-PDAI Annual Conference in Bali on Friday, Malhotra acknowledged that while India’s economy and financial markets have shown remarkable resilience, they are still vulnerable to global uncertainties.
“In view of the rapidly evolving situation, especially on the global front, we are continuously monitoring and assessing the economic outlook. We will be agile and proactive in our actions on the policy front,” he said.
Malhotra noted significant improvement in the growth-inflation balance, with headline inflation projected to remain aligned to the 4% target in FY26. However, he cautioned that weather-related disturbances and global volatility continue to pose inflationary risks.
He projected a real GDP growth rate of 6.5% for FY26 — lower than previous years, but still placing India as the world’s fastest-growing major economy. “Yet, this is much below what we aspire for,” he added.
On the financial markets, Malhotra said all segments, including forex, government securities, and money markets, have largely remained stable. While the rupee faced some pressure earlier, it has since recovered. Despite equity markets witnessing corrections due to capital outflows, he said the government securities market remained strong throughout FY25.
He highlighted that gross borrowings of Rs 24.7 lakh crore by central and state governments were completed smoothly, with a 28-basis-point drop in the borrowing cost for the Centre.
Malhotra also pointed to evolving foreign exchange markets, with increased liquidity, transparency, and tighter bid-ask spreads. The RBI is piloting a new initiative to allow individuals to buy US dollars via the Bharat Connect platform, aiming to improve accessibility.
Raising concerns about unauthorized forex platforms, the Governor urged banks to remain vigilant and boost public awareness, noting continued misuse of banking channels for such illegal activities.
“As India aims to claim its rightful place in the new global order, the financial markets must facilitate efficient, cost-effective funding to fuel our aspirations,” he concluded.