Corporate Investment Scenario Seen Brighter In 2025, Says RBI Governor Sanjay Malhotra

Consumer and business confidence for the year ahead remains high, and the investment scenario is brighter as corporates step into 2025 with robust balance sheets and high profitability, Reserve Bank of India Governor Sanjay Malhotra said.

"Notwithstanding the uncertainties shrouding the global macrofinancial ethos as it unfolds, prospects for the Indian economy are expected to improve after the slowdown in the pace of economic activity in the first half of 2024-25," Malhotra was quoted as saying in the RBI's Financial Stability Report for December 2024.

This is despite the fact that uncertainties are shrouding global macro outlook.

Stress tests show that capital levels of the banking system as well as of the non-banking financial companies sector will remain well above the regulatory minimum requirements even under adverse stress scenarios.

On the global front, decline in inflation will continue and align with targets during the year ahead, which will allow purchasing power to recover and brighten global prospects, Malhotra said.

"As monetary policy gains headroom to further support economic activity, financial conditions can be expected to remain easy and contribute to an improvement in the trajectory of global GDP from a prolonged phase of low growth," he said, adding that robust labour market and sound financial system too provide congenial conditions for this turnaround.

However, the global medium term outlook remains challenging with risks arising from possible intensification of geopolitical conflicts, sporadic financial market turmoil, extreme climate events and rising indebtedness.

Further, stretched asset valuations, fragilities in the less regulated non-bank financial intermediaries, and threats from new and emerging technologies also add to the evolving uncertain outlook, he said.