India’s GDP Growth Projected at 6.6% for FY25, Says RBI

Reserve Bank of India (RBI) Governor Sanjay Malhotra on Friday expressed strong confidence in India’s economic prospects, stating that a 7 percent growth rate or higher is not only achievable but should be a national aspiration.

His remarks came during a press briefing following the Monetary Policy Committee's (MPC) decision to cut the repo rate by 25 basis points to 6.25 percent. This marks the first rate adjustment in two years and the first reduction in five years.

Malhotra said that India has the potential to reach and surpass a 7 percent growth rate, urging the nation to aim for this target. Despite the rate cut, the RBI has retained its GDP growth projections for the financial year 2024-25 at 6.6 percent and anticipates a slight increase to 6.7 percent for 2025-26.
Explaining the rationale behind the decision, Malhotra highlighted the central bank’s current focus on fostering economic growth, noting that inflation is on a downward trajectory. “At present, we are focusing on growth because inflation is down and will continue to go down,” he said. While reiterating that price stability remains the RBI’s primary mandate under the RBI Act, Malhotra pointed out that current economic conditions allow for greater emphasis on growth. The RBI continues to aim for aligning inflation with its 4 percent target.

In December 2024, the Consumer Price Index (CPI)-based inflation stood at 5.2 percent, while the Wholesale Price Index (WPI) rose to 2.37 percent from 1.89 percent in November.

Addressing questions on bank security and consumer protection, Malhotra reaffirmed the RBI’s commitment to safeguarding consumers. He stressed that any instances of mis-selling by banks would be taken seriously and assured that the central bank would make every effort to assist victims of bank fraud, reinforcing its focus on financial security.

RBI Deputy Governor Swaminathan J also addressed regulatory concerns, stating that most issues are resolved through direct dialogue with the central bank. He clarified that only the most severe violations become public, referring to them as “the rarest of the rare” cases. For most issues, supervisors engage with financial entities on a bilateral basis, and these interactions occur regularly as part of the RBI’s ongoing oversight.

Malhotra also addressed the regulatory burden on financial institutions, noting that the cost of compliance is always considered before new rules are implemented. He assured that the RBI would provide sufficient time for the rollout of updated Liquidity Coverage Ratio (LCR) norms to prevent market disruptions. Regarding the Expected Credit Loss (ECL) framework, Malhotra clarified that it remains in the discussion stage, with no official draft released yet. Additionally, new project finance norms are expected to be introduced by March 2026.

In a move to bolster digital security, the RBI announced the establishment of new web domains for Indian banks and Non-Banking Financial Companies (NBFCs), aimed at helping consumers distinguish official websites from fraudulent ones.

Malhotra also acknowledged the potential impact of global economic volatility on India’s growth but remained optimistic about the country’s prospects. He highlighted strong manufacturing activity, stable consumption trends, and healthy agricultural and reservoir levels as positive indicators supporting India’s economic outlook.

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