Despite an unfavourable and challenging global environment, the Indian economy has demonstrated remarkable resilience and is poised to register robust growth, Reserve Bank of India (RBI) Governor Sanjay Malhotra said.
“The headroom provided by the inflation outlook has allowed us to remain growth-supportive,” Malhotra said in the RBI’s December Bulletin. He added that the central bank would continue to meet the productive requirements of the economy in a proactive manner while ensuring macroeconomic stability.
Reflecting on the year, Malhotra noted that as India reaches the final month of an “eventful and challenging” 2025, there is reason for satisfaction. “The economy witnessed robust growth and benign inflation; the banking system further consolidated; and the regulatory framework was refined to strengthen the financial system, enhance ease of doing business and improve consumer protection,” he said.
At the same time, he said, the country is entering the new year “with hope, vigour and determination” to further support economic momentum and accelerate progress.
Since the October monetary policy review, India has witnessed rapid disinflation, with inflation falling to unprecedentedly low levels. For the first time since the adoption of the flexible inflation targeting (FIT) framework, average headline inflation for a quarter dropped to 1.7 per cent in Q2 of 2025-26, breaching the lower tolerance threshold of 2 per cent around the 4 per cent target. Inflation moderated further to just 0.3 per cent in October 2025.
On the growth front, real GDP expanded by 8.2 per cent in the second quarter, supported by strong festive-season demand, aided in part by the rationalisation of goods and services tax (GST) rates. Inflation at a benign 2.2 per cent and growth of 8.0 per cent in the first half of 2025-26 together present “a rare Goldilocks period”, Malhotra said.
Looking ahead, the RBI Governor highlighted that domestic factors such as healthy agricultural prospects, the continued impact of GST rationalisation, low inflation, strong balance sheets of corporates and financial institutions, and supportive monetary and financial conditions are likely to sustain economic activity.
“Continuing reform initiatives would further facilitate growth,” he added.
(IANS)
