Amid heightened global geopolitical uncertainty, volatile financial conditions, and rapid technological change, India’s monetary and financial sectors displayed resilience and stability during April-December 2025, according to the Economic Survey 2025-26 tabled in Parliament by Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman.
The Survey highlights that prudent monetary management, agile liquidity operations, and a strong regulatory framework have helped India navigate global shocks while sustaining domestic growth momentum. It underlines the importance of regulatory innovation, transparency, and accountability in an era marked by uncertainty and fast-evolving financial markets.
Regulatory Reforms and Institutional Strengthening
The Survey draws attention to the Reserve Bank of India’s Framework for the Formulation of Regulations, issued in May 2025, which institutionalises a transparent, consultative, and impact-driven approach to regulation-making. This framework signals a shift from reactive regulation to anticipatory and evidence-based governance, aligned with global best practices.
A key institutional reform highlighted is the creation of a Regulatory Review Cell within the RBI. The Cell is mandated to review each regulation at least once every five to seven years, ensuring continuous relevance, effectiveness, and adaptability to changing market and technological conditions.
Monetary Policy: Balancing Stability with Growth
The Economic Survey notes that India’s monetary policy continues to balance macroeconomic stability with social and developmental objectives. By maintaining price stability, supporting financial stability, and fostering inclusive growth, monetary policy remains a critical enabler of sustainable development.
In response to moderating inflation, the Monetary Policy Committee (MPC) reduced the repo rate and complemented this with cash reserve ratio (CRR) cuts and open market operations (OMOs) to inject durable liquidity into the system. These measures were aimed at boosting credit flow, investment activity, and overall economic growth.
The Survey observes that monetary policy transmission has been effective, with weighted average lending rates of scheduled commercial banks declining, reflecting the accommodative policy stance.
Liquidity Management and Credit Transmission
Throughout FY 2025-26, the RBI maintained an agile approach to liquidity management, ensuring adequate system liquidity to meet the productive requirements of the economy. This proactive stance supported smooth transmission across money and credit markets.
Broad money growth accelerated to over 12 per cent, compared to around 9 per cent a year earlier, indicating effective utilisation of liquidity by banks. RBI’s OMOs further strengthened liquidity conditions, with the net Liquidity Adjustment Facility (LAF) position averaging a surplus of about ₹1.89 lakh crore during FY 2025-26 (up to 8 January 2026).
Conclusion
The Economic Survey concludes that India’s monetary and financial sectors have demonstrated strong resilience, adaptability, and institutional maturity despite global uncertainty. Prudent monetary policy, effective liquidity support, and forward-looking regulatory reforms have reinforced financial stability while supporting inclusive growth. This balanced approach positions India well to withstand external shocks and sustain long-term economic momentum. (Source: PIB PR ID 2219997)
Economic Survey of India 2025-26 dated 29/01/2026