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Reserve Bank of India (RBI) Governor Sanjay Malhotra expressed confidence in India's economic potential, stating that the country can certainly achieve a growth rate of over 7 per cent. Speaking at the post-Monetary Policy Committee (MPC) press conference on Friday, Malhotra emphasised that this should be the target India aspires to.
"These are difficult questions to answer, but nevertheless, I would like to stick my neck out and say that certainly India can achieve a 7 per cent plus growth rate, and we should certainly aspire for it," the RBI Governor said when asked about the feasibility of attaining such a growth rate.
According to ANI, the government's Economic Survey has projected India's growth rate for the upcoming fiscal year 2025-26 to be in the range of 6.3 to 6.8 per cent. Meanwhile, the RBI has forecasted a growth rate of 6.7 per cent for the same period.
When questioned about the balance between growth and inflation, Malhotra stated that managing inflation and ensuring price stability remain the primary objectives for India, while also keeping economic growth in view. "So we will continuously focus on that, trying to meet these objectives. We will try to align the inflation with the target that has been given to us," he said, as per ANI reports.
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The Governor further noted that the time had come for the RBI to adopt a more supportive stance towards economic growth, given that inflation is showing signs of moderation. "Inflation is expected to decline further, and we will maintain a neutral stance so that we can proactively respond to evolving macroeconomic conditions," Malhotra stated.
In response to a query on whether the RBI aims to maintain inflation within the 2-6 per cent band or at the ideal 4 per cent mark, Malhotra remarked, "In RBI, we like to be on top of everything," suggesting that the central bank is working towards aligning inflation with the 4 per cent target.
On the inflation outlook, the central bank anticipates Consumer Price Index (CPI) inflation to ease to 4.8 per cent in 2024-25, with Q4 inflation projected at 4.4 per cent. Looking ahead to 2025-26, inflation is forecasted to be at 4.2 per cent, with quarterly estimates of Q1 at 4.5 per cent, Q2 at 4.0 per cent, Q3 at 3.8 per cent, and Q4 at 4.2 per cent.
As per ANI, announcing key takeaways from the recent RBI MPC decisions, Malhotra pointed out that inflation has declined, supported by a favourable outlook on food prices and the continued impact of previous monetary policy measures. He further stated that inflation is expected to moderate further in 2025-26, aligning gradually with the RBI's target.
Malhotra also highlighted that food inflation pressures are expected to ease significantly, thanks to a promising rabi crop, which would contribute to a stable inflation outlook.
According to ANI, in his first Monetary Policy announcement since assuming office as RBI Governor, Malhotra and the committee unanimously decided to reduce the policy rate by 25 basis points (bps), bringing it down from 6.5 per cent to 6.25 per cent. This marks the first such rate cut in nearly five years, reflecting the RBI's strategic shift towards fostering economic growth while maintaining inflation control.
