‘Our economy is on strong footing, we are in a far better condition’, says RBI Governor Malhotra

India’s economic condition is very “strong, capable and healthy” despite the adverse impact of the West Asia conflict and global uncertainties said Reserve Bank of India (RBI) Governor Sanjay Malhotra while answering a question during the post Monetary Policy Cimmittee (MPC) meeting press conference on Friday (June 5, 2026).  

“There is a global shock and, in that, India is not alone. All countries are affected. However, as far as India economic condition is concerned, we are comparatively, as compared to other countries and similar shocks, today better placed. Our economic strength has increased. We are having Gross Domestic Product [GDP] growth of about 6.5% and no major country has this type of growth,” Mr. Malhotra said.

However, he said inflation will increase in line with the rise in fuel prices. “But we expect it will not last long. Our financial strength is robust, our economy is growing, our banks are strong and capable and India’s corporate sector’s balance sheet is very healthy. Our foreign exchange reserves are enough and it can take care of 11 months of imports. Overall, we are in a far better condition,” he emphasised. 

He said the RBI was confident that it would deal with the current situation effectively and in turning this crisis into an opportunity, the country would emerge stronger so that such crisis and shocks would be faced effectively. 

Asked if the situation has changed from last month when Prime Minister Narendra Modi had urged the citizens not to go on foreign travel, postpone buying gold, work from home, and reduce fuel consumption, he said “It is important for all of us to be prudent, to be judicious, not be wasteful. That message I think he gave and it should be taken on that spirit.”

Answering another question on what worries the RBI the most, he said, “Its the duration of the conflict and the time it would take for the restoration of the supply chain. The major risk is what impact it will have on price and for how long.”

Other than this the worries are concerning monsoon and El Nino, he added.

In this year’s inflation forecast, the RBI has assumed the price of crude at $95 per barrel, so the projected inflation is higher.

Earlier in the day, despite all major central banks gearing up to tighten monetary policy, the Monetary Policy Committee (MPC) voted unanimously to hold policy Repo Rate at 5.25% and maintain the neutral stance.

Since the passthrough of higher fuel prices has become visible in overall price rise across sectors, the MPC has reduced growth forecast for FY27 to 6.6% from 6.9% earlier and increased inflation number to 5.1% which is 50 basis point higher than the earlier projection.