Mumbai: In a pointed rejoinder to US President Donald Trump that India is a “dead economy”, the RBI Governor Sanjay Malhotra on Wednesday declared that the nation contributes nearly 18% to the global economic growth annually, which is more than the 11% of the US share.
Malhotra said, “We are doing well, and we’re contributing 18% to the global growth, which is more than what the US economy is believed to be contributing.” In October 2023, IMF had projected that India’s contribution to the global growth would touch 18% by 2028.
“The above normal southwest monsoon, lower inflation, rising capacity utilisation, and congenial financial conditions continue to support India’s economic activity. The supportive monetary, regulatory and fiscal policies including strong government capital expenditure, should boost demand. “With sustained growth in construction and trade segments, the services sector is expected to remain buoyant in the coming months.
“Prospects of external demand, however, remain uncertain amidst ongoing tariff announcements and trade negotiations. The headwinds emanating from prolonged geopolitical tensions, persisting global uncertainties, and volatility in global financial markets pose risks to the growth outlook,” Malhotra pointed out. Taking several factors into account, real GDP growth for 2025-26 is projected at 6.5%, with Q1 at 6.5%, Q2 at 6.7%, Q3 at 6.6%, and Q4 at 6.3%. Real GDP growth for Q1:2026-27 is projected at 6.6%. The risks are evenly balanced.
The uncertainties of tariffs, the RBI chief said, are still evolving. Monetary policy transmission is continuing. The impact of the 100 bps rate cut since February 2025 on the economy is still unfolding.
“Despite a challenging external environment, the Indian economy is navigating a steady growth path with price stability. Monetary policy has appropriately used the policy space created by the benign inflation outlook to support growth without compromising on the primary objective of price stability. Meanwhile, the apex bank decided to keep the repo rate unchanged at 5.5% despite reciprocal tariff threats from the US. The MPC’s decision, which was widely expected, left the repo rate unchanged with a unanimous vote by all six members of the policymaking panel. Monetary policy stance remains ‘neutral’. The standing deposit facility rate will remain unchanged at 5.25%, and the marginal standing facility rate and the bank rate at 5.75%.
Transmission of our recent policy actions to the broader economy is underway,” RBI chief told ‘The Free Press Journal’. Monetary policy has appropriately used the policy space created by the benign inflation outlook to support growth without compromising on the primary objective of price stability. Transmission of our recent policy actions to the broader economy is underway.
