India continues to offer strong growth and stability, making it a natural destination for investors looking for long-term value and opportunity, Reserve Bank of India governor Sanjay Malhotra said.
The Indian economy is likely to expand 6.5% this year, making it the fastest-growing major economy in the world despite the rise in global uncertainties, he said at the US-India Economic Forum, organised by the Confederation of Indian Industry and US India Strategic Partnership Forum, in Washington DC on Friday. The transcript of his address was published on the RBI website on Sunday.
“At a time when many advanced economies are facing economic headwinds and a deteriorating economic outlook, India continues to offer strong growth and stability, making it a natural choice for investors seeking long-term value and opportunity,” the governor said.
The 6.5% growth projected for the current fiscal is despite rising uncertainty and volatility in global financial markets. While this rate is lower than recent years and falls short of India’s aspirations, it remains broadly in line with past trends and is the highest among major economies, Malhotra said.
“India continues to be an economy supported by stability – monetary, financial and political; policy consistency and certainty; congenial business environment; and strong macroeconomic fundamentals,” the RBI governor said.
Malhotra said India offers a policy ecosystem that is transparent, rule-based, and forward-looking – an ideal setting for long-term and productive investments.
Malhotra told the gathering that over the last 10 years, India has leapfrogged from the 10th largest economy to the fifth. In terms of purchasing power parity, India is already third. “Even nominally, we are poised to become the third-largest economy shortly. We aspire to become Viksit Bharat i.e. a developed economy by 2047, when we complete 100 years of our independence. While there is indeed a scope for India’s growth trajectory to rise over the medium to long-term, I am sanguine of our continued success.”
He said India’s financial sector is strong and vibrant, efficiently catering to funding requirements of various economic agents.
The banking sector, which continues to meet large funding requirements of the economy, has demonstrated resilience with healthy a balance sheet. He said the soundness of the scheduled commercial banks has been bolstered by strong profitability, lower non-performing assets and adequate capital and liquidity buffers. The health of non-banking financial companies (NBFCs) sector is also robust.
The bank credit growth, although moderating in recent months, continues to be in double digits (about 12%), compared to an average of about 10.5% in the last 10 years, he said.
“We are committed to further enhancing the capacity, responsiveness and resilience of the banking and non-banking financial sectors with an emphasis on balancing regulation with efficiency and stability. While offering excellent opportunities for investment, as private debt to GDP is still on the lower side, the banking sector is poised to meet the investment needs of the society and industry,” Malhotra said.