RBI has not ‘lost sight’ of growth, says Governor Malhotra ahead of new US tariff

The Reserve Bank of India (RBI) has not “lost sight” of supporting growth even as price stability remains its primary mandate, Governor Sanjay Malhotra said on Monday, days before the United States enforces steep new tariffs on Indian goods.

“The primary objective of monetary policy in terms of price stability has significantly contributed to the strength of India’s macro fundamentals,” Malhotra told a banking industry event in Mumbai.

“At the same time, monetary policy has not lost sight of its objective of growth.” In his inaugural address at ‘FIBAC 2025’, the Governor said RBI is examining measures to expand bank credit, including the sunrise sectors.

"I would like to emphasise that we might seem to be on opposite sides, with the regulated entities trying to accelerate growth and the regulators focusing on stability, but we actually have the same objectives. We are in the same team, we have the same shared vision of a Vikshit Bharat," he said.

Malhotra’s remarks come two days before Washington enforces President Donald Trump’s additional 25% tariff hike on Indian imports, which would double cumulative levies to 50%, among the highest on any major economy’s products.

Prime Minister Narendra Modi’s government is exploring steps to boost domestic demand, including an overhaul of the goods and services tax aimed at spurring consumer spending.

The central bank left its key policy rate unchanged earlier this month after cutting it by 100 basis points since February, as policymakers assessed the risks from tariff-related uncertainties. Consumer price inflation fell below the RBI’s 2-6% target band in July for the first time in eight years, potentially giving the central bank room to ease further if growth weakens.

Malhotra urged banks and corporates to “come together and drive the animal spirits to create an investment cycle” at a time when balance sheets are strong.

He said the RBI is examining measures to expand credit to emerging sectors and will continue to balance its mandate of price stability with the need to support growth.

“We might seem to be on opposite sides, with the regulated entities trying to accelerate growth and the regulators focusing on stability, but we actually have the same objectives … a shared vision of a Vikshit Bharat,” he said.

The governor added that India remains resilient despite global trade and geopolitical headwinds, and called on financial institutions to step up investment in technologies such as artificial intelligence and machine learning to improve efficiency and customer service.

"We are now at a critical juncture... as we navigate the choppy global economic environment, characterised by heightened trade, uncertainty, and persisting geopolitical tensions, we need to push the frontiers of growth," he added.