Macro sovereignty cannot be sacrificed for capital easing, RBI governor Sanjay Malhotra stated firmly at Princeton University.

Macro sovereignty cannot be sacrificed for capital easing, RBI governor Sanjay Malhotra stated firmly at Princeton University. The central bank chief defended India's cautious approach to capital account liberalization, calling it prudence rather than conservatism. Malhotra highlighted RBI's strategic measures including capital controls for residents, limits on short-term foreign debt, and forex market interventions. These policies proved crucial during the global financial crisis, allowing Indian banks to emerge with stronger balance sheets than peers. He emphasized that sequencing capital account liberalization is fundamental to macroeconomic sovereignty for developing economies like India. On current challenges, Malhotra said RBI focuses on data-dependent policies and managing expectations rather than demand suppression during supply shocks.