India can achieve 7% growth rate and should aspire for more: RBI Governor

Projected growth rate of India by RBI stands at 6.6% in FY25 and 6.7% in FY26

Reserve Bank of India (RBI) Governor Sanjay Malhotra on Friday voiced confidence in India’s economic growth, asserting that a 7 per cent growth rate or higher is both achievable and should be a national aspiration. His remarks came during a press briefing after the Monetary Policy Committee's (MPC) announcement to cut the repo rate by 25 basis points to 6.25 per cent, the first rate adjustment in two years and the first reduction in five years.

 

“India can achieve a 7 per cent growth rate and above, and we should aspire for that,” Malhotra said. The RBI maintained its gross domestic product (GDP) projections for the financial year 2024-25 (FY25) at 6.6 per cent and projects GDP growth at 6.7 per cent for FY26.

 

Commenting on the decision, Malhotra said, “At present, we are focusing on growth because inflation is down and will continue to go down.” He reaffirmed that the RBI remains vigilant, proactive, and nimble in managing liquidity and responding to macroeconomic shifts.

 

On inflation, the governor clarified that while price stability remains the primary mandate under the RBI Act, the current economic conditions allow for greater support for growth. He emphasised that the RBI aims to align inflation with the 4 per cent target.

 

Consumer Price Index (CPI)-based inflation in December 2024 stood at 5.2 per cent and WPI rose to 2.37 per cent in December, from 1.89 per cent in November.

 

Consumer protection and financial regulation

When asked about bank security and consumer protection, Malhotra highlights the RBI’s commitment to protecting consumers, stating that any mis-selling by banks will be taken seriously. He assured that the central bank will make every effort to assist in bank fraud cases, reinforcing its focus on financial security.

 

RBI Deputy Governor Swaminathan J said many issues are resolved through dialogue with the central bank. The only actions that get publicised are the “rarest of the rare” cases involving egregious violations. Outside of these, supervisors mostly engage with entities on a bilateral basis, and these types of interventions happen on an ongoing basis.

 

In a bid to ease regulatory burdens, Malhotra said the cost of compliance is always considered before implementing new rules. Regarding the Liquidity Coverage Ratio (LCR) norms, the RBI will provide sufficient time for implementation to avoid market disruption.

 

On the expected Credit Loss framework, the governor clarified that it remains a discussion paper with no official draft released yet. Similarly, new project finance norms are expected to roll out by March 2026. The RBI in its MPC announced the establishment of new web domains for both Indian banks and NBFCs, so consumers can differentiate official sites from fraudulent ones.

 

Global uncertainty and policy flexibility

Acknowledging global economic volatility, Governor Malhotra noted its potential impact on India’s growth. However, he highlighted positive indicators such as strong manufacturing activity, stable consumption trends, and healthy agricultural and reservoir levels, which boost optimism for the country’s economic prospects.

 

While prioritising growth in the current environment, Malhotra maintained that the RBI’s stance remains neutral, ensuring policy flexibility to react swiftly to changing macroeconomic conditions.