RBI's monetary policy review: A measured shift toward growth

In its latest monetary policy review, the Reserve Bank of India (RBI) unveiled a series of wide-ranging measures that mark a strategic shift toward supporting economic growth while strengthening India's financial ecosystem.

- TDG NETWORK

The central bank, under Governor Sanjay Malhotra, cut the repo rate by 25 basis points—from 6.25% to 6%—and changed its stance from "neutral" to "accommodative", signaling an intent to stimulate growth amid global headwinds and moderating inflation.

This policy direction includes a host of systemic interventions in regulation, payments, fintech innovation, and credit markets. Together, they reflect a holistic approach to monetary policy—balancing macroeconomic stability with proactive reform.

ACTIONS AND GROWTH OUTLOOK

Governor Malhotra projected India's real GDP growth for FY2025-26 at 6.5%, revised downward from the earlier 6.7%, citing increasing global trade frictions and tariff uncertainties. This follows a robust 9.2% growth in FY2024-25, as per data from the Ministry of Statistics and Programme Implementation.

"The agriculture sector is expected to do well due to healthy reservoir levels and crop output. Manufacturing is gaining momentum, and services remain resilient," the governor noted, adding that rural demand is steady and urban consumption is on the rise, aided by discretionary spending.

Investment activity, he emphasized, is gathering pace, driven by infrastructure spending, high-capacity utilization, and healthy balance sheets across banks and corporates. However, he warned that merchandise exports could come under pressure due to global slowdown, though services exports and remittances are expected to stay strong, bolstering external resilience.

SIX NEW SYSTEMIC MEASURES