The Reserve Bank of India (RBI) maintained its policy repo rate at 5.25% and kept a neutral policy stance, citing heightened uncertainty stemming from the Iran conflict and a deteriorating global environment [1]. In conjunction with the rate decision, both the government and the RBI announced a series of measures aimed at supporting the Indian Rupee and attracting foreign capital. These measures include the removal of capital gains and interest taxes for foreign investors in government bonds, enhanced incentives for non-resident dollar deposits, and concessional foreign exchange swaps for overseas borrowing [1].
Policymakers revised their macroeconomic outlook, raising the inflation forecast for the current fiscal year to 5.1% from the previous 4.6%, and lowering GDP growth expectations to 6.6% from 6.9%. These adjustments reflect the impact of higher oil prices and weaker external conditions on the Indian economy [1].
Authorities estimate that the newly announced measures could attract between USD 40 billion and USD 60 billion in inflows, which are expected to help offset pressures from capital outflows and a weakening currency [1].
CONCLUSION
The RBI's decision to hold rates steady while introducing targeted measures underscores its commitment to defending the rupee and stabilizing capital flows. The revised forecasts highlight ongoing economic challenges, but the anticipated inflows from policy changes could provide meaningful support to the currency and broader market sentiment.