New Delhi, Mar 2 (KNN) RBI Governor Sanjay Malhotra has said that policy interest rates are expected to remain steady or ease, while warning of risks from global uncertainty, climate change, technological disruptions, and escalating tensions in West Asia.
In an interview with The Economic Times, Malhotra said the central bank will release full-year growth and inflation projections in its next policy review, factoring in revisions to the base year and methodology as well as changes in global tariff assumptions.
“We have not yet finalised numbers for the next year. We are still analysing the impact of the changes. Our analysis will also account for the impact of changes in tariffs,” he added.
Growth, Investment and External Position
Malhotra said India’s growth has improved from below 6 per cent in the 1980s and 1990s to an average 6.6 per cent in the past decade and 7.3 per cent during FY24–FY26 under the new series. Headline inflation, which averaged 6.9 per cent in the nine years before inflation targeting, moderated to 4.9 per cent in the subsequent nine years.
He said the health of corporates, banks, governments and the private sector has strengthened, providing confidence in India’s short-, medium- and long-term outlook.
On investment trends, the Governor noted that gross foreign direct investment (FDI) rose about 13 per cent last year. Slower growth in net FDI, he said, reflects higher repatriations and overseas investments, which he described as natural and linked to investment cycles.
Addressing concerns about foreign portfolio flows shifting towards AI-focused markets, Malhotra said such movements are driven by shorter investment horizons and not by weaknesses in India’s fundamentals.
He added, “India too is investing in all five layers of AI-energy, chips, infrastructure, LLMs and applications-and AI adoption is also rising. India will certainly be part of this AI story as evident from the AI summit held recently,”
On external stability, Malhotra noted, “Our macroeconomic fundamentals remain strong. Our forex reserves can cover current account deficits over decades. Several FTAs have been signed and some are in the pipeline. That will help the current account and also the capital account by bringing investments into India.”
He highlighted, “Over USD 250 billion of investment pledges have been made during the AI summit. Earlier, USD 67.5 billion was committed by tech giants. The government has liberalised the insurance sector to allow 100 per cent FDI.”
Rupee and Policy Approach
On the rupee, the RBI Governor said exchange rates are determined by market demand and supply. He noted that the currency has historically strengthened in the final quarter of the financial year and added, “We do not target any levels. We only aim to curb excessive volatility in either direction,” according to ET.
(KNN Bureau)
