India's strong macroeconomic fundamentals are positioning it as an anchor of stability in a turbulent global economy, according to Reserve Bank of India (RBI) Governor Sanjay Malhotra. Speaking at the Kautilya Conclave in New Delhi, Malhotra highlighted India's resilience amidst global challenges like trade friction, debt, and geopolitical shocks.

Key Pillars of Strength

Several factors underpin India's robust macroeconomic profile:

• Strong GDP Growth: India's economy has demonstrated strong growth, with an average annual growth of around 8% in the four years following the COVID-19 pandemic. The real GDP grew 7.8% in the first quarter of fiscal year 2025-26, surpassing the 7.4% growth in the previous quarter. This growth is supported by strong domestic demand, including private consumption and fixed investment. The RBI has revised India's GDP growth forecast for fiscal year 2025-26 upwards to 6.8% from an earlier estimate of 6.5%.
• Benign Inflation: India has experienced relatively low inflation, remaining within the RBI's 2-6% target band. The central bank's proactive policy measures, including interest rate adjustments and liquidity management, along with government supply-side interventions, have helped to keep price pressures in check. Anchored inflation expectations have supported stable consumption patterns and improved investor confidence.
• Healthy Foreign Exchange Reserves: India's foreign exchange reserves are substantial, standing at $700.2 billion as of late September 2025. These reserves provide ample cover for merchandise imports, exceeding 11 months' worth.
• Narrowing Current Account Deficit: India's current account deficit has narrowed, reaching 0.2% of GDP in the first quarter of fiscal year 2025-26, a significant improvement from 0.9% a year prior.
• Strong Banking Sector: Indian banks are well-capitalized, with sufficient liquidity buffers, robust asset quality, and reasonable profitability.
• Fiscal Prudence: The Indian government has demonstrated fiscal prudence, with the fiscal deficit to GDP ratio budgeted to moderate from a high of 9.2% to 4.4% in fiscal year 2025-26. The central government's effective capital expenditure is budgeted at 4.3% of GDP for 2025-26.

RBI's Role in Maintaining Stability

The RBI has played a crucial role in maintaining macroeconomic stability. Governor Malhotra emphasized that the central bank remains committed to price stability and economic growth. The Monetary Policy Committee (MPC) has taken measures to promote growth while keeping inflation in check. The RBI is also examining measures to expand bank credit.

Global Context

In a world facing numerous economic challenges, including trade tensions and geopolitical risks, India stands out as a beacon of stability. While advanced economies grapple with fragility, India's strong macroeconomic fundamentals provide a buffer against global shocks. The International Monetary Fund (IMF) has projected that India will be the fastest-growing major economy.

Looking Ahead

India's economic outlook remains positive, with expectations of continued growth and stability. Factors such as a resilient consumer base, a broadening investment landscape, and a digitally skilled workforce are expected to drive economic expansion. The government's policy push to boost consumption spending and ease monetary policy further support this outlook.