Is India in a Goldilocks Phase? RBI Governor Sanjay Malhotra Responds After Policy Review

RBI Governor Sanjay Malhotra on Friday responded to a question on whether India is currently in a “Goldilocks” phase, following the conclusion of the Reserve Bank of India’s latest Monetary Policy Committee (MPC) meeting.

Addressing the issue during the post-policy interaction, Malhotra said growth conditions have improved compared to the previous meeting, while the overall macro position is better than earlier.

“The volatility in the food prices, core inflation, underlying inflation, barring precious metals, is very benign, continues to be benign. So we are in the same position, more or less the same position insofar as inflation is concerned. Growth appears to be better than it was earlier. We are in a better position than we were, you know, when we met last.”

RBI Revises Near-term Growth Projections

The Governor’s remarks came as the RBI revised its GDP growth projections upward for the first two quarters of FY27, reflecting stronger economic momentum than earlier anticipated.

According to the policy statement, GDP growth for Q1 FY27 was revised higher, while Q2 FY27 growth was also raised, indicating improved activity levels compared to projections made at the previous policy review. The central bank cited domestic demand conditions and investment trends as key factors supporting growth.

At the meeting, the RBI retained the policy repo rate and maintained its existing policy stance, while reviewing domestic growth drivers, liquidity conditions, and global developments. The MPC said future policy actions would remain guided by evolving data.

The RBI also took note of stable financial conditions, adequate system liquidity, and resilience in key sectors of the economy while assessing the growth outlook.

Why the Goldilocks Question Was Raised?

The question of a “Goldilocks” phase was raised in the context of upgraded growth projections and policy continuity highlighted in the latest review. The term is commonly used to describe a phase where economic conditions are considered balanced.

Malhotra’s response focused on changes in growth conditions since the last meeting and the RBI’s current macro assessment.

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