Strong growth, stability make India ideal for long-term bets: RBI Guv

Time of India

28-04-2025

Reserve Bank of India
(RBI) governor Sanjay Malhotra has pitched
India
as a long term investment destination. Speaking at
US-India Economic Forum
organised by the Confederation of Indian Industry (CII) and US India Strategic Partnership Forum (USISPF) in Washington, Malhotra said, India continues to offer strong growth and stability making it a natural choice for investors seeking long term value and opportunity, at a time when advanced countries are facing economic headwinds. 'India's strong domestic demand and relatively lower dependence on exports cushions the Indian economy from external spillovers,' Malhotra said.
He mentioned that over the past four years (2021-22 to 2024-25), India has recorded an average annual growth rate of 8.2%, to remain the fastest-growing major economy in the world. "This is a significant step up from the average growth rate of 6.6% in the preceding decade (2010 to 2019)," Malhotra said.
In its annual policy review earlier this month the RBI had projected 6.5% growth in FY26 lower than the 6.7% predicted earlier reflecting the impact of global trade and policy uncertainties. The central bank forecasted inflation to drop to 4% inflation for FY26 from 4.20% due to lower oil prices, assuming normal monsoon and reducing food inflation.
"Even this year, our growth is expected to remain robust at 6.5 %," Malhotra said in Washington. "This is despite the tremendous increase in uncertainty and volatility in global financial markets. While this rate is lower than in recent years and falls short of India's aspirations, it remains broadly in line with past trends and the highest among major economies," he said.
Malhotra directed investor focus towards policy continuity, financial stability, infrastructure focus, digitisation, demographic dividend, manufacturing focus which he described as the strengths of India.
"India offers a policy ecosystem that is transparent, rule-based, and forward-looking – an ideal setting for long-term and productive investments. As the world's fastest-growing major economy, India is not just a destination for investment – it is a partner in prosperity," Malhotra said.
India's foreign exchange reserves at $686 billion covers over 11 months of import and 96% of external debt outstanding at end December 2024.
He said India's flexible inflation targeting framework adopted in 2016, has significantly strengthened policy
predictability as inflation levels and volatility has come down markedly. "...inflation expectations are better anchored, and the transmission of monetary policy has improved. In view of the benign inflation outlook and moderate growth, monetary policy has turned accommodative," he said.
Earlier this month the RBI owered the policy rate by 25 basis points for the second consecutive rate cut in two months.
The monetary policy committee (MPC) cited a sharp fall in food inflation, challenging global growth environment and nascent domestic economic recovery as the reasons for the rate cut in a unanimous decision. The MPC also changed the stance to accommodative for the first time since June 2022 signalling that the central bank will move either to reduce rates or stay put in the medium term.
RBI expects inflation to be around 4% for the next 12 months even the central bank's focus has now decisively shifted to support economic growth.