In a Turbulent World, India’s Steady Economic March
By Sanjeev Oak
As global central banks oscillate between fighting inflation and supporting growth, the Reserve Bank of India (RBI) has displayed rare composure — managing to keep inflation in check without derailing growth.
While central banks across the world struggle to rein in inflation amid recessionary fears and war-driven economic disruptions, the Reserve Bank of India (RBI) has been charting a measured, steady course. Even while cutting rates, it has balanced growth and price stability — turning India’s monetary stance into a global case study in policy maturity.
Global volatility, local clarity
The global economy has endured repeated shocks in recent years — the post-pandemic slowdown, inflation flare-ups in the US and Europe, the energy crunch triggered by the Russia-Ukraine war, and China’s deceleration. Confronted with this turbulence, central banks elsewhere have swung wildly between rate hikes and cuts.
Russia, grappling with a war economy, has moved interest rates up and down at breakneck speed. The US Federal Reserve and the European Central Bank have also remained caught between inflation control and growth revival.
“Against this background of confusion, the RBI’s steady hand stands out.”
Since March 2023, the RBI held the repo rate at 6.50%. In June 2025, it made a calibrated 50 basis point cut — only after inflation had eased close to its 4% target. The move was aimed at stimulating growth, with RBI projecting GDP expansion above 6.5% for FY2025–26.
Why India could afford to cut
This cautious optimism rests on strong domestic capital expenditure, buoyant construction and services, and recovering rural demand. RBI policy has complemented the government’s infrastructure push, ensuring the growth impulse is sustained without letting inflationary pressures get out of hand.
In stark contrast, Russia’s monetary strategy reflects the pressures of war: sanctions have limited exports, technology access, and foreign investment. After hiking rates to 21% in late 2023, its central bank slashed them twice in quick succession to 18% — moves that, while meant to spur demand, risk reigniting inflation.
The virtue of patience
India’s rate strategy in 2022–23 — raising rates to curb inflation while still maintaining 7% growth — strengthened financial stability. Bad loans fell, banks improved their balance sheets, and MSMEs retained credit access.
Governor Shaktikanta Das has made it clear that the benefits of the June 2025 cut will flow gradually to borrowers, homebuyers, and small businesses. This is a contrast to Russia’s aggressive cuts aimed at triggering immediate spending — a gamble in a fragile inflation environment.
“Developed world central banks have struggled to achieve what the RBI has quietly delivered.”
Thinking beyond numbers
Over the past two years, global central banks have often been reactive rather than strategic. The ECB raised rates seven times in a single year; the Fed pursued aggressive hikes. Yet inflation and unemployment remain stubborn in both the US and EU.
RBI, on the other hand, factors in not just inflation metrics but also rainfall patterns, food supply conditions, and global oil prices before moving rates. Its Monetary Policy Committee (MPC) blends government, RBI, and independent economist perspectives — avoiding one-sided decision-making.
Stability as a growth driver
This comparative analysis shows the RBI is not fixated on numbers alone — it weighs the social and commercial consequences of every move. Inflation control, growth momentum, and steady credit supply remain the three pillars of its approach.
India’s strategy prioritises stability and fiscal discipline, adopting self-reliant policies to withstand global shocks. The June 2025 rate cut is emblematic of this philosophy — cautious, consistent, and confidence-building.
“The RBI’s policy stance is not just about managing inflation; it’s about building credibility.”
The road ahead
For FY2025–26, India targets GDP growth above 6.5%. With inflation stable, job creation improving, and investor confidence rising, the RBI’s steady course may well be its biggest contribution to sustaining this trajectory.
In Russia, war expenses, falling exports, restricted foreign investment, and sanctions complicate recovery despite rate cuts. In India, by contrast, policy clarity and stability are proving to be powerful economic assets.