RBI Governor Sanjay Malhotra highlighted India’s robust economic fundamentals despite global uncertainties arising from the West Asia crisis. In an interview with Doordarshan, he acknowledged potential risks to the economy due to geopolitical tensions and a weak monsoon. Malhotra also addressed concerns about the rupee’s performance amidst a strong US dollar.
India’s external sector is expected to remain resilient, supported by strong services exports, remittances, and new trade agreements. The governor emphasized recent government initiatives to facilitate foreign investment, boost exports, and enhance the country’s balance of payments. However, he cautioned that challenges persist, urging policymakers to adopt a cautious approach.
Malhotra noted that recent inflationary pressures were primarily driven by supply-side factors. The RBI has maintained its benchmark policy rate at 5.25% this year to balance economic growth and price stability. Rising global oil prices, fueled by US-Iran tensions, pose additional risks for India, a major oil importer.
Amidst these dynamics, India’s retail inflation stood at 4.38% in June, within the RBI’s target range of 2-6%. The central bank has revised its CPI inflation projection for FY27 to 5.1%, citing global supply chain disruptions and volatile commodity prices. The upcoming monetary policy committee meeting in August will assess the economic landscape and determine key interest rates.
