RBI Governor Sanjay Malhotra said the government’s borrowing programme remains relatively modest, allowing authorities to mobilise resources at reasonable costs while maintaining stability in financial markets.
Speaking at the post-monetary policy press conference on Friday, Malhotra emphasised that assessing net borrowings provides a clearer picture than focusing solely on gross borrowing figures. He noted that gross borrowing may rise in FY27 due to higher redemptions, but net borrowing is projected at ₹11.73 lakh crore, only about ₹20,000 crore higher than the previous year. Considering the overall size of the Budget, he said a significantly larger increase might otherwise have been expected.
Malhotra also indicated that the government plans to raise funds through Treasury Bills during the financial year. According to him, this strategy is expected to help manage the yield curve more effectively and improve efficiency in handling the borrowing programme. He added that projections related to small savings schemes remain conservative, supporting the view that borrowing costs can stay manageable.
On liquidity conditions, the RBI Governor said the central bank has ensured adequate liquidity in the financial system to facilitate the transmission of earlier repo rate reductions. He clarified that the RBI is not currently considering changes to its liquidity management approach.
Addressing investment trends, Malhotra said tax incentives for data centres could attract fresh capital into digital infrastructure. He indicated that such policy measures may strengthen long-term investment flows into the sector.
Commenting on India’s external sector, the Governor described the near- and medium-term outlook as favourable. He pointed to multiple trade agreements concluded over the past year, which he said could support export growth, attract foreign investment and improve productivity levels.
Malhotra also stressed that India’s foreign exchange reserves remain sufficient to meet external financing needs. He noted that reserves are more than twice the level of short-term external borrowings, describing the external position as comfortable despite ongoing deficits.
He further highlighted increased foreign investment interest, citing the opening of the insurance sector to foreign direct investment and investments flowing into India’s private banking sector as indicators of confidence in the country’s economic prospects.
On the broader macroeconomic outlook, the RBI Governor expressed confidence that India can meet its external sector requirements. He stated that inflation conditions appear at least as favourable as during the previous monetary policy review, while economic growth prospects have strengthened compared to the last meeting of the Monetary Policy Committee.
The remarks follow the central bank’s latest monetary policy review, with policymakers signalling stability in borrowing, liquidity and external sector indicators amid evolving domestic and global economic conditions.
