MUMBAI: Despite rising protectionism around the world, India remains committed to market reforms, according to Sanjay Malhotra, governor of the Reserve Bank of India. Speaking at an event organised by the Confederation of Indian Industry and the US India Strategic Partnership Forum on Friday, Malhotra pointed to the new liberalisation measures in defence, insurance, petroleum, telecom, and space.
Stating that market-oriented policies had been a consistent theme across successive Indian governments, Malhotra said, “While the pace and specific focus of reforms may have varied from time to time, the commitment to a more market-oriented economic structure has not changed.” The governor said that almost all sectors have been opened up to 100% foreign direct investment in a phased manner. “Almost 90% of the FDI is now under the automatic route,” he added.
Malhotra painted a bullish picture of India’s prospects. “India is poised to be a dynamic powerhouse of opportunities, innovation, and sustainable growth in the years to come,” he said. He credited monetary policy for helping to tame inflation. “In view of the benign inflation outlook and moderate growth, monetary policy has turned accommodative,” he said, noting a cumulative 50 basis point reduction in policy rates this year.
The Indian economy, he said, had demonstrated “remarkable resilience and dynamism”, with average growth of 8.2% over the past four years, compared with 6.6% in the previous decade. Growth is expected to hold up at 6.5% this year despite global financial volatility. Over the past decade, India has climbed from the world’s tenth-largest economy to the fifth-largest, and ranks third by purchasing-power parity. “Even nominally, we are poised to become the third largest economy shortly,” Malhotra said.He reiterated India’s goal of becoming a developed economy by 2047.
On external balances, he said India’s current account deficit remains manageable at 1.3% of GDP and that the rupee has held up better than many emerging-market currencies. India’s foreign-exchange reserves, he noted, stood at $686.1 billion as of April 18th.