FPJ News Service mumbai

There are many structural shifts that are reshaping the global economy, including growing fragmentation in trade, rapid technological disruption, ongoing climate change and protracted geopolitical hostilities, RBI Governor Sanjay Malhotra said on Monday.

The global structural shifts, Malhotra said, make economic forecasts difficult and policy interventions challenging. Therefore, even as they navigate through the fog of uncertainty, it is imperative for central banks and financial sector regulators to remain vigilant, prudent and agile in safeguarding their economies and financial systems.

“The Indian economy remains a key driver of global growth. Growth momentum is buoyed by strong domestic growth drivers, sound macroeconomic fundamentals and prudent policies. Nonetheless, external spillovers and weather-related events could pose downside risks to growth.

The Indian economy, supported by strong macroeconomic fundamentals, remained the fastest growing major economy in the world during 2024-25. Moreover, as India’s growth is largely dependent on domestic demand, the impact of external shocks remains limited. In terms of growth outturns11 for 2024, India’s actual growth rate did not deviate significantly from projections even amidst deteriorating global outlook.

The RBI has projected the real GDP to grow at 6.5% in 2025-2612, same as in 2024-25, supported by buoyant rural demand, revival in urban demand, an uptick in investment activity on the back of above-average capacity utilisation, government’s continued thrust on capex and congenial financial conditions.

The continued momentum in various high frequency indicators of the services sector, robust agricultural production and above normal southwest monsoon forecasts, and strong GST collections underscore the sustained momentum and resilience of the economy.

“The outlook for inflation, on the other hand, is benign and there is greater confidence in the durable alignment of inflation with the Reserve Bank’s target,” Malhotra added. The announcement of large tariffs by the US administration in April has set in motion a new paradigm in trade and economic policy. Geopolitical risks remain elevated.

The ensuing policy uncertainty and unpredictability will influence global growth. International agencies, including the IMF, the OECD and the World Bank, have revised growth downwards. Against this backdrop, near-term global financial stability risks have increased.