India's economy is on a robust growth trajectory, projected to achieve high expansion even amidst global headwinds, according to the Reserve Bank of India (RBI). Governor Sanjay Malhotra, on Wednesday, expressed confidence in the nation's economic resilience, attributing the positive outlook to powerful domestic forces.
Strong Domestic Pillars Support Growth
In his foreword to the latest Financial Stability Report (FSR), Governor Malhotra highlighted that despite a volatile and unfavourable external environment, the Indian economy is expected to register strong performance. He identified robust domestic consumption and sustained investment as the twin engines propelling this growth. The central bank, however, remains vigilant about potential near-term challenges arising from external spillovers.
Financial Stability as the 'North Star'
Malhotra emphasised that "maintaining financial stability and strengthening the financial system remains our north star." He outlined a balanced regulatory philosophy where stability is foundational but not the sole objective. Financial sector regulators also recognise the critical importance of:
- Promoting innovation and growth within the sector.
- Ensuring robust consumer protection mechanisms.
- Adopting a pragmatic and responsive approach to regulation and supervision.
"The most important contribution the policymakers can make is to foster a financial system that is robust and resilient to shocks, efficient in providing financial services and promotes responsible innovation," the RBI Governor stated.
Building Guardrails for a Resilient Economy
The Governor pointed to several factors underpinning the economy's strength, including benign inflation, healthy balance sheets across financial and non-financial corporations, and the presence of sizeable buffers. He also credited prudent policy reforms for this resilient foundation.
Looking ahead, Malhotra assured that the RBI will continue to build strong guardrails to shield both the economy and the financial system from potential future shocks. This proactive stance aims to safeguard the growth momentum and ensure long-term, sustainable development for the nation.
