Confidence is high, outlook is bright: Malhotra on economy

But stress tests show GNPA ratio of banks may rise under baseline scenario

- MANOJIT SAHA

The prospects of the Indian economy are expected to improve following the recent slowdown in GDP growth, with consumer and business confidence remaining high, said Sanjay Malhotra, governor of the Reserve Bank of India.

"Notwithstanding the uncertainties shrouding the global macro-financial ethos as it unfolds, prospects for the Indian economy are expected to improve after the slowdown in the pace of economic activity in the first half of 2024-25," said Malhotra in the foreword of the December 2024 edition of the RBI's Financial Stability Report, published on Monday.

This was Malhotra's first commentary on the Indian economy since assuming the charge as RBI governor earlier this month. GDP growth in the second quarter (July-September) of the current financial year decelerated to 5.4 per cent, significantly below market expectations.

"Consumer and business confidence for the year ahead remains high, and the investment scenario is brighter as corporations step into 2025 with robust balance sheets and high profitability," he said.