Mon Dec 30 12:20:20 UTC 2024: ## RBI Governor Predicts Economic Uptick in 2025 Despite Current Slowdown
**New Delhi** – India’s new Reserve Bank of India (RBI) Governor, Sanjay Malhotra, expressed optimism about the country’s economic prospects, predicting an improvement in 2025 despite a recent slowdown. In the foreword to the Financial Stability Report released on Monday, Malhotra acknowledged criticism from the government regarding the central bank’s focus on inflation over growth.
India’s GDP growth slowed to a seven-quarter low of 5.4 percent in the second quarter of 2024-25, following a 6 percent growth in the first half. The Finance Ministry has voiced concerns about this deceleration, suggesting potential structural factors are at play. Malhotra, however, highlighted high consumer and business confidence as a key indicator of future growth, anticipating an economic pick-up in the second half of the current fiscal year.
He emphasized the RBI’s commitment to maintaining financial stability and supporting growth through strengthening financial institutions. Stress tests indicate that the banking and Non-Banking Financial Companies (NBFCs) sectors possess sufficient capital buffers to withstand adverse conditions. Furthermore, Malhotra noted ongoing reforms and intensified surveillance within the financial sector regulators.
While acknowledging global uncertainties such as geopolitical conflicts, climate change, and rising debt levels, Malhotra pointed to a potential easing of inflation globally, creating space for monetary policy to stimulate economic activity. A robust labor market and a sound financial system, he added, are conducive to a global economic turnaround. Despite this positive outlook, Malhotra cautioned that medium-term challenges remain.
First Piper 