India signals: This is not the time to hold back

Economic Times

a day ago

ET Online As the global economy navigates choppy waters—geopolitical flashpoints, tariff tremors, and a retreat from globalisation—India is not merely staying afloat but charting its course with quiet resilience and growing confidence.The recent 50-basis point rate cut by RBI is more than a monetary move—it is a strategic calibration, anchoring growth while maintaining hard-earned inflation stability.
We must pause to recognise this rare alignment: retail inflation has dipped to a six-year low of 3.2%, driven by softening food prices and stable core inflation. Simultaneously, GDP grew 7.4% in the March quarter, taking full-year FY25 growth to 6.5%. Most economies manage either low inflation or high growth—India is achieving both, with a balance that is increasingly admired. This moment is no accident. It is the outcome of a decade of structural reform and digital infrastructure building. Aadhaar, UPI, GST, IBC, Rera— the scaffolding of a modern, efficient, and inclusive economy. Add to that GoI's continued capex push—up 17.4% in the FY26 budget—and RBI's liquidity infusion and phased CRR reduction, releasing ₹2.5 lakh crore into the banking system. Together, they reflect a finely coordinated fiscal-monetary strategy—not aimed at mere recovery, but at resurgence.The deeper signal behind the rate cut is employment—especially with a million entering the workforce every month. Encouraging trends in rural FMCG sales and urban vehicle demand point to momentum, but much more is needed. The real engine lies with India's SMEs—the country's largest job creators. For them, lower interest rates, easier access to credit, and regulatory certainty are not luxuries—they are lifelines.Importantly, RBI has reiterated that price stability is not at odds with growth—it is its foundation. When inflation is anchored, purchasing power is protected, long-term planning becomes viable, and entrepreneurial risk-taking flourishes.This stability is now reinforced by a progressive regulatory move. RBI's Lending Against Gold and Silver Collateral Directions, 2025, mark a significant liberalisation—especially for small-ticket borrowers. For the first time, loans up to ₹2.5 lakh can be extended at an LTV of 85%, reflecting a realistic understanding of rural and micro-enterprise needs.Practical hurdles around compliance and auction price transparency have been addressed. The result: more dignity, speed, and fairness in credit delivery. With over ₹20 lakh crore of household gold lying idle, this reform can unlock capital for MSMEs, small traders, and rural households—transforming dormant assets into engines of growth. It's not just reform; it's grassroots financial empowerment.Yet the external environment remains fragile. OECD and IMF have trimmed global growth forecasts below 3%, while WTO anticipates a contraction in merchandise trade. Rising debt, financial fragmentation, and tech disruptions in advanced economies add to the turbulence. India must remain watchful even as it grows more self-assured.Fortunately, our financial sector is in far stronger shape than in past cycles. Bank NPAs are at multi-year lows, capital buffers are solid, and credit growth is gaining traction. Stress in retail unsecured lending is easing, and institutions are recalibrating. That said, the microfinance segment still requires close attention.On the external front, India remains resilient. Forex reserves exceed $691 bn —enough to cover over 11 months of imports. Services exports, especially in software and business services, continue to perform well. FTA with Britain —covering 99% of Indian exports—is a strategic milestone.But beyond the numbers lies a deeper shift in sentiment. Investors sense an opportunity. Entrepreneurs, despite the global noise, are building for the long term. Consumers—both rural and urban—are showing quiet confidence in the future.In many ways, India today is like a young startup—tested but unbroken, ambitious yet grounded, frugal yet bold. The fundamentals— 3Ds of demography, digitalisation, and domestic demand—are strong. But even strong fundamentals need fuel. With 100 bps of rate cuts since February and a move to a neutral stance, MPC is signalling: it's time to accelerate—not rashly, but decisively.The road ahead will not be linear. Tariffs may resurface. Weather may disrupt. Global capital may hesitate. But India has built buffers—macroeconomic, institutional, and digital—that give it resilience.The message to businesses and investors is clear: this is not the time to hold back. It's time to lean in—with innovation, investment, and inclusion. As the global order realigns, India doesn't just have a seat at the table—it is helping build the table. (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.) Elevate your knowledge and leadership skills at a cost cheaper than your daily tea. Benchmarked with BSE 1000, this index fund will diversify your bets. But at a cost.
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