Sanjay Malhotra: ‘RBI active in policy action amid changing global situation’, comments Governor Malhotra
New Delhi| Speaking at the annual conference of the 24th FIMMDA-PDAI in Bali, Indonesia, Reserve Bank of India (RBI) Governor Sanjay Malhotra said that, while last year was challenging for financial markets globally, there are still uncertainties due to the trade war. The RBI Governor talked about taking his fight against high inflation to the final stage and creating new avenues in an environment of uncertainty. He said that even in an uncertain environment, Indian financial markets have remained stable and all segments have performed better. The conference focused on guiding the Indian financial markets in the changing environment where the performance of the current financial markets was discussed.
RBI Governor Sanjay Malhotra said financial markets have performed modestly, while they are not untouched by the uncertainties of the uncertain and volatile global environment. As we mentioned in our statement following the recent monetary policy announcement, our domestic growth inflation balance has improved significantly. Due to which inflation is expected to remain in line with the target of 4 percent in FY 2026. Global uncertainties and meteorological disturbances, although posing risks to the inflation outlook. Even though we forecast some low real terms GDP growth at 6.5 percent for FY2026, India is still the fastest growing economy. Despite this, it is much less than our aspiration. We have reduced repo rates twice and also provided adequate liquidity in the market. Malhotra said that given the rapidly evolving situation, especially on the global front (tariff trade war), we are continuously monitoring and assessing the economic outlook. As always, we will continue our work on the policy front.
Speaking on the Indian financial market, he said, all market segments including the Indian financial market foreign exchange (FX), government securities (G-Sec), money market have remained largely stable. While the rupee came under some pressure against the dollar a few months ago, it has performed better since then. Equity markets recovered significantly as capital outflows picked up, which was seen in most emerging markets, he said. However, the government securities market has remained stable throughout the year. Gross market borrowing of central and state governments which totaled Rs 24.7 lakh crore in FY 2024-25 has been easily repaid. Borrowing costs for central government decreased by 28 basis points from 7.24 per cent in FY2024 to 6.96 per cent in FY25. The secondary market remained quite deep and active in GSec, which has been partly helped by India’s inclusion in global bond indices.
Malhotra said that amidst all this, India stands on the threshold of change and possibilities, where it is facing many changes and challenges, yet it is full of opportunities. We will have large population and skilled manpower and develop our capabilities by developing and using technology to transform the society.
