On 9 April 2025, the Reserve Bank of India unanimously decided at the bilateral meeting of monetary policy, decreasing the repo rate to reduce it from 6.25 percent to 6 percent and in this monetary policy, the stains have been stabilized (stable). Its requirement is that in the coming time, the Reserve Bank of India will either keep it stable, not increasing the repo rate or announces the decrease in it. This decision has been taken by the Reserve Bank of India due to the success in controlling the rate of inflation in India. In recent times, the US has announced a huge tariff on imported goods from other countries, causing an outcry in the stock market of almost all the countries around the world and the stock markets are constantly going down. In such an environment, the announcement of a decrease in the repo rate by the Reserve Bank of India should be called a proper step. However, inflation in India has now come under control and normal (103 percent) of rain has been estimated in India during the upcoming monsoon. This year, bumper yield of wheat has been estimated to be in the Rabi season, the price of vegetables and fruits has decreased in Indian markets, so the rate of retail inflation has come down by 4 percent in total. The Reserve Bank of India has also estimated to be below 4 percent of the inflation rate in India in 2025-26. Also, crude oil prices have also decreased rapidly due to constant changing developments globally and it has come down from US $ 75 per barrel to US $ 60 per barrel. This is very good news for India, because, this will increase the profitability of manufacturing units and will reduce fuel prices in the country and eventually there will be further decrease in currency inflation rate. For the Reserve Bank of India, it will be possible and easy to further cut the repo rate through the upcoming monetary policy.
The trade war waged by the US globally is not likely to have a lot of adverse effects on the Indian economy and according to the Reserve Bank of India assessment, India’s economic growth rate can be 6.5 percent in the financial year 2025-26 and it was estimated to be 6.7 percent in the past, that is, the tariff on the imported on its country has been expressed by the US. The Indian economy is not actually very much dependent on exports. Only about 16–17 percent of India’s GDP is exported to other countries. Out of this, only about 2 percent of India’s GDP is exported to America. Therefore, the tariff imposed on different countries by the Trump administration at different rates is likely to have a negligible impact on the Indian economy.
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Amid the above mentioned problems globally, the International Monetary Fund (IMF) has estimated that by the year 2028 India will become the third largest economy in the world and in 2025 and 2026, India’s GDP will continue to grow by 6.5 percent. During the last 10 years, the Indian economy has increased by 100 percent. By the end of this year, the level of India’s GDP will reach 4.27 lakh crore US $, which is made about 360 lakh crore rupees in the Indian rupee. The size of the Indian economy has doubled in the last 10 years from 2015 to 2024. In the year 2015, India’s GDP size was at US $ 2.10 lakh crore (Rs 180 lakh crore) and India was in 10th order among the world’s largest economies. In the year 2025, the size of the Indian economy is estimated to double to US $ 4.27 lakh crore.
During the last 10 years, the Central Government has implemented several reform programs in the economic and financial sector, especially the improvement in the field of agriculture. Also, there has been a huge increase in the capital expenditure of the Central Government to create infrastructure in India. Foreign investment is continuously expanding in the country and there has been an incomparable increase in employment opportunities. The production incentive scheme (PLI) has been implemented to encourage the establishment of new units in the field of manufacturing in India. Under the Mudra Yojana, Indian banks (including private and government sector banks) have distributed loans worth Rs 33 lakh crore on the guarantee of the Central Government. The field of agriculture has expanded during the last 10 years in the midst of irregular climatic conditions in India, which has succeeded in keeping the income of farmers stable. Also, the central government has assisted the citizens living below the poverty line at a very good level through special government schemes and subsidies. Due to this, many families of this category have now fallen into the middle category and are helping the growth of various products in India. The digitization implemented in the country has also brought transparency in the transactions made in India and this has proved to be an achievement in India. Today, indirect tax of about 2 lakh crore rupees is being stored through Goods and Services Tax in India and it has helped in the development of infrastructure in the country.
India today has become the fifth largest economy in the world after America, China, Germany and Japan. During the last 10 years, the Indian economy has come from 10th to 5th position in the world today, making a long jump. According to the assessment of the International Monetary Fund, India’s GDP has increased by 100 percent in the last 10 years, while 65.8 percent of the US, 75.8 percent of China, 43.7 percent of Germany and only 1.3 percent in Japan. According to an estimate of the International Monetary Fund, India’s economic growth rate will remain 6.5 percent per annum in 2025 and 2026, thus India will become the fourth largest economy in the world, leaving behind Japan in the year 2026 and India will become the third largest economy in the world, leaving behind Germany in 2028. There is a very small difference between the GDP of Germany, Japan and India. Japan’s GDP is at US $ 4.4 lakh crore level, Germany’s GDP is at US $ 4.9 lakh crore, while India’s GDP is at 4.3 lakh million US $.
If in the coming years in India, inflation is curbed and the Reserve Bank of India is constantly reduced in interest rates in the coming time, then India can be able to move its economic growth rate beyond 6.5 percent. Therefore, the Reserve Bank of India has implications in the currency policy to liberate the stains from stable.
– Prahlada Sabnani
Retired Deputy General Manager,
state Bank of India
K-8, Chetakpuri Colony,
Jhansi Road, Lashkar,
Gwalior – 474 009
