“The RBI’s decision to keep the repo rate unchanged at 5.25% while maintaining a neutral stance reflects a balanced, pragmatic approach amid elevated global uncertainty and rising crude oil prices. The upward revision in CPI inflation projections to 5.1% and GDP growth outlook to 6.6% highlights the central bank’s focus on price stability while recognizing the resilience of India’s economy and strength of its macroeconomic fundamentals, as Governor Sanjay Malhotra noted that India’s economy is ‘in a good spot’. Beyond the rate decision, the policy’s key highlight is its emphasis on enhancing India’s appeal to global investors. The proposal to increase investment limits for NRIs and OCIs in listed equity instruments without SEBI registration, and to extend the same facility to all individual Persons Resident Outside India (PROIs), is a significant step toward broadening participation in Indian capital markets, expected to improve market depth, liquidity and long-term capital inflows. Equally important is the removal of capital gains tax on government securities investments for foreign investors. This move strengthens the attractiveness of India’s bond market and could encourage greater foreign participation in government debt. At a time of heightened global volatility, these measures reinforce investor confidence, support capital inflows, and reaffirm India’s commitment to building deeper, more globally integrated financial markets, with the policy rate expected to remain low for an extended period.”
