RBI Governor Malhotra on Economic Outlook: Credit, CAD, FDI
Why in the news
RBI Governor Sanjay Malhotra spoke at an event of the Confederation of Indian Industry (CII) and the US-India Strategic Partnership Forum, presenting a positive view of banking and the economy.
Key facts
| Theme | Point made |
|---|---|
| Bank credit growth | About 12%, versus 10.5% decade average |
| Policy rate | Down 50 bps cumulatively in 2025 |
| GDP growth (current FY) | 6.5% projected, highest among major economies |
| Current account deficit | 1.3% of GDP |
| FDI inflows, 2024-25 | $75.1 billion |
| Central capex | 1.7% of GDP (2019-20) to 3.1% (2024-25) |
| Average GDP growth, 2021-2025 | 8.2% yearly, against 6.6% in the decade before |
Banking sector
- Healthy balance sheets, with enough capital and liquidity buffers to meet investment needs.
- Falling NPAs have lifted profitability and soundness of scheduled commercial banks.
External sector
- CAD is manageable thanks to services exports and private remittances.
- The rupee moved in an orderly way despite volatility, backed by ample forex reserves.
- FDI inflows moderated slightly because of higher repatriations.
- Low export dependence and strong domestic demand cushion the economy against US tariff shocks.
Fiscal and reforms
- The government was praised for fiscal consolidation along with growth-supporting spending and better-targeted expenditure.
- Liberalisation and market-oriented policy have continued across governments of different parties.
Exam angle
- Numbers: credit 12%, CAD 1.3% of GDP, FDI $75.1 bn, capex 3.1% of GDP.
- Speaker: RBI Governor Sanjay Malhotra; event hosts: CII and US-India Strategic Partnership Forum.