Sanjay Malhotra, Governor of the Reserve Bank of India (RBI) | Photo credit: PUNIT PARANJPE
The Reserve Bank of India’s (RBI) projections suggested that interest rates “should remain low for a long period of time,” Malhotra told the newspaper.
Malhotra said the RBI’s economic forecasts had not taken into account the potential impact of trade deals currently under negotiation, which if concluded would boost India’s economic growth.
“The impact of the US trade deal could be as much as half a percentage point,” he told the FT.
Malhotra told the FT that the latest gross GDP figure “was surprising” and that the RBI, which had forecast 7% annual growth in the July-September quarter, “had to improve our forecasts”.
South Asia’s economy expanded by a sharper-than-expected 8.2% contraction in the July-September quarter, but growth is expected to slow as the full impact of US-imposed tariffs of up to 50% hits exports and sectors from textiles to chemicals.
The world’s fifth-largest economy is under pressure from punitive tariffs imposed by US President Donald Trump, widening the trade deficit and pushing the currency to record lows.
Earlier in December, RBI cut the key repo rate by 25 basis points and left the door open for further easing by taking steps to increase liquidity in the banking sector by up to $16 billion to support a ‘Goldilocks’ economy.
Published on December 17, 2025
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