India Will Continue To Attract Foreign Investments Says RBI Gov Malhotra
India’s CPI inflation rose slightly but stayed subdued at 1.3 per cent year on year in December compared to 0.7 per cent year on year in the previous month on unfavorable base effect and rise in gold prices.
Mumbai : The Reserve Bank of India (RBI) Governor Sanjay Malhotra described the Indian economy as being in a "Goldilocks phase," with strong growth and manageable inflation. In an interview to a news channel, Malhotra said that the current inflation levels are largely driven by supply-side factors, including lower food prices, base effects, and subdued global commodity prices.
“As base effects fade, inflation is already rising. Our projections show inflation moving towards 3–4 per cent, which is a comfortable range. Core inflation is also well-behaved. Overall, inflation is at a level we are comfortable with,” he said.
India’s CPI inflation rose slightly but stayed subdued at 1.3 per cent year on year in December compared to 0.7 per cent year on year in the previous month on unfavorable base effect and rise in gold prices.
The governor also downplayed concerns regarding the continuous depreciation of the Indian rupee against the dollar stating that the strength of an economy should not be judged solely by the currency level. “Growth, inflation control, financial stability, forex reserves, investment and consumption matter more. On all these parameters, India is doing well. We will ensure stability and orderly movement of the rupee.”
Over the past 12 months, the rupee depreciated by about 6 per cent against the US dollar surpassing the Rs 90 per dollar level for the first time in December on uncertainty regarding the Indo-US trade deal and continuous outflows by foreign portfolio investors. It is one of the weakest currencies in 2025.
“India’s macro fundamentals are strong high growth, low inflation, forex reserves of about $690 billion, and a manageable current account deficit. Over the long term, a depreciation of about 3–3.5 per cent annually is natural, given India’s inflation differential with advanced economies.
The governor also said that the country will continue to attract foreign investments on the back of strong domestic growth even as inflows may not be linear.
“India’s growth story remains intact. We grew 8 per cent in the first half, are projected at 7.4 per cent this year, and around 7 per cent next year. Capital demand will remain strong. Inflows may not be linear year-on-year, but overall, India should continue attracting quality investments across banking, technology and the broader economy.”
