The Reserve Bank of India (RBI) Governor Sanjay Malhotra said the de-escalation in the West Asia conflict and ongoing peace efforts involving Iran are
positive developments for both the global and Indian economy. India is deeply interconnected with the West Asian region and any sustained truce would support both growth and inflation outcomes, he said in an exclusive interaction with ET NOW. Governor Malhotra further expressed confidence in India's investment cycle, saying investments continue to hold up well despite global uncertainties, and highlighted the strength of the banking system and described the shift of household savings towards capital markets as a healthy development for the economy. "Indian economy has weathered the recent energy shock relatively well, aided by measures taken by the government and oil marketing companies, with high-frequency indicators pointing to continued resilience. The global environment remains uncertain and the RBI continues to remain in a wait and watch mode," he said.
Investment activity remains robust
Further on the pickup in bank credit growth, RBI Governor said the investment activity remains robust across sectors and there is no sign of a major slowdown in capex despite global uncertainties.
Investments in India have been holding up and doing well, he said pointing at the rising investment activity in shipbuilding and hospitality, following policy initiatives aimed at boosting growth in these sectors.
"Don't see a great slowdown in investments but there is certainly room to accelerate investments. We will see much higher investment across sectors as certainty increases," he said.
Talking on the energy supply normalcy, he cautioned that the truce remains fragile and it will take time for energy supplies to normalise fully. Inventories have declined during the conflict period, and many countries are expected to rebuild strategic reserves, factors that could continue to influence oil markets in the months ahead.
While acknowledging the positive impact of lower crude prices, Malhotra emphasised that it is too early to conclude that inflation risks have disappeared. The RBI remains focused on assessing whether recent price pressures are temporary or become embedded in inflation expectations, he said.
