Facing criticism from the government over the central bank prioritising inflation over growth, the new RBI Governor Sanjay Malhotra on Monday said that prospects of the Indian economy are expected to improve on the back of high consumer and business confidence in 2025.
“As we strive to preserve financial stability to support a higher growth path for the Indian economy, our focus remains steadfast on maintaining stability of financial institutions and, more broadly, systemic stability,” Malhotra said in foreword to the Financial Stability Report.
He further said that despite the global uncertainties Indian economy is expected to pick up pace in the second half of the current financial year.
“Notwithstanding the uncertainties shrouding the global macro-financial ethos as it unfolds, prospects for the Indian economy are expected to improve after the slowdown in the pace of economic activity in the first half of 2024-25.
“Consumer and business confidence for the year ahead remain high and the investment scenario is brighter as corporations step into 2025 with robust balance sheets and high profitability,” said Malhotra who took over as 26th Governor earlier this month.
Flagging the issue of growth moderation in the first half, the Finance Ministry in its November Monthly Economic Review had raised concerns that the possibility that structural factors may also have contributed to the slowdown in H1 should not be ruled out.
India recorded a slowdown in GDP growth to a seven-quarter low of 5.4 per cent for the second quarter ended September 2024. For the first half, the GDP growth stood at 6 per cent.
Slowdown in growth and moderation in inflation are building case for RBI to slash policy rate in its upcoming Monetary Policy Committee meeting.
Malhotra further said that financial sector regulators in India too are intensifying reforms and sharpening their surveillance against