RBI Governor Highlights India's Economic Resilience Amid Challenges

Economic Outlook from RBI Governor

New Delhi: The Indian economy has demonstrated impressive resilience, even in the face of a challenging global landscape, according to RBI Governor Sanjay Malhotra.

He noted that the favorable inflation outlook has provided the necessary space to support growth.

In the Central Bank’s December Bulletin, he stated, “We will proactively address the productive needs of the economy while maintaining macroeconomic stability.”

Reflecting on the year, Malhotra expressed satisfaction with the progress made in 2025, despite its challenges.

The economy has experienced strong growth alongside manageable inflation; the banking sector has strengthened, and regulatory measures have been enhanced to improve the financial system, facilitate business operations, and bolster consumer protection.

Looking forward to the new year, he expressed optimism and determination to continue supporting economic growth.

Since the October policy update, India has seen a significant decline in inflation, reaching historically low levels.

For the first time since implementing flexible inflation targeting (FIT), the average headline inflation for Q2 2025-26 was recorded at 1.7%, falling below the lower tolerance threshold of 2% set for the 4% inflation target, and further decreasing to just 0.3% in October 2025.

Conversely, real GDP growth surged to 8.2% in Q2, driven by robust consumer spending during the festive season, aided by adjustments in goods and services tax (GST) rates. With inflation at a manageable 2.2% and growth at 8.0% in the first half of 2025-26, Malhotra described this as a unique 'goldilocks period.'

He emphasized that domestic factors such as promising agricultural conditions, ongoing GST reforms, low inflation, and strong corporate and financial institution balance sheets, along with favorable monetary and financial conditions, are expected to sustain economic momentum.

Malhotra concluded by stating that ongoing reform efforts will further enhance growth.