"Connecting communities, empowering nations: Unifying the Regional and Global Economy ."

As Sanjay Malhotra assumes the role of the 26th Governor of the Reserve Bank of India (RBI), he inherits a complex economic landscape characterized by slowing growth and persistent inflation. His predecessor, Shaktikanta Das, navigated the Indian economy through significant challenges, including the COVID-19 pandemic, emphasizing balanced growth and inflation control.

Historical Context of RBI’s Monetary Policies

The RBI’s monetary policy has evolved through various phases:

Monetary Targeting (1985-1998): In response to fiscal dominance and the need to control inflation, the RBI adopted monetary targeting, focusing on controlling money supply to achieve price stability.

Transition to Multiple Indicator Approach (1998-2016): Recognizing the limitations of strict monetary targeting, the RBI shifted to a multiple indicator approach, considering various economic indicators to inform policy decisions.

Flexible Inflation Targeting (2016-Present): The RBI adopted a flexible inflation targeting framework, aiming to maintain inflation within a specified target range while supporting economic growth.

Challenges Ahead for Governor Malhotra

Governor Malhotra faces several pressing challenges:

1. Balancing Growth and Inflation: With GDP growth slowing to 5.4% in the recent quarter—the slowest in nearly two years—and inflation rising to 6.2% in October, surpassing the RBI’s target, achieving a balance between stimulating growth and controlling inflation is paramount.


2. Maintaining Policy Continuity and Stability: In his initial statements, Malhotra emphasized the importance of continuity and stability in policy decisions, while also highlighting the need to remain alert and agile in response to global economic changes.


3. Navigating External Pressures: Global economic uncertainties, including geopolitical tensions and trade dynamics, necessitate a cautious approach to safeguard India’s economic interests.

Potential Policy Direction

Given the current economic indicators and his stated priorities, Governor Malhotra may consider the following policy directions:

Monetary Easing: There is market anticipation of a potential interest rate cut in the upcoming policy reviews to stimulate economic growth. Analysts suggest that a high real policy rate and softening growth could create room for the RBI to lower the repo rate by 75 basis points starting in February 2025.

Enhanced Financial Inclusion: Building on previous initiatives, Malhotra may prioritize policies that promote financial inclusion, ensuring broader access to banking services across diverse demographics.

Strengthening Regulatory Frameworks: Addressing the inherent conflicts arising from the RBI’s multiple roles, there may be efforts to streamline functions to enhance the effectiveness of the core monetary policy mandate.


Governor Sanjay Malhotra’s tenure comes at a critical juncture for India’s economy. His approach to balancing the dual objectives of fostering economic growth and maintaining price stability will be instrumental in steering the country through its current challenges. By emphasizing policy continuity, stability, and inclusivity, while remaining responsive to evolving economic conditions, Malhotra aims to uphold the RBI’s commitment to public good and economic dynamism.