HSBC Report Says Economic Reforms Key to India’s Growth, Not Just RBI Policy
Reforms Could Boost India’s Exports, Investment, and Credit Growth, Says HSBC
A new report by HSBC Global Investment Research suggests that India has a major opportunity to grow if it makes the right economic reforms. As global supply chains are changing, India could become a key producer and exporter of goods, which would help boost investment, credit, and GDP.
The report highlights a common debate: which comes first—GDP growth or credit growth? HSBC adds a new idea to the mix: reforms must come first.
These reforms include:
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Lowering import tariff rates
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Signing international trade deals
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Attracting more foreign direct investment (FDI)
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Making it easier to do business in India
The report says that while some reforms have already started, they need to go deeper and faster to have a real impact.
It also points out that markets often forget quickly. For example, last year everyone was worried about slow deposit growth. This year, the concern is weak credit growth. In both cases, many expect the RBI (Reserve Bank of India) to fix the problem. But according to HSBC, monetary policy can only help so much.
The real solution lies in fixing the economy itself, especially how GDP grows.
Last year’s low deposit growth came from two issues:
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Overall weak deposit numbers
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Too few “sticky” deposits—deposits that stay in the system long-term
Once inflation started to fall, the RBI responded by cutting interest rates and increasing money supply. As a result, real deposit growth picked up in early 2025.
However, HSBC notes that this recovery wasn’t entirely due to RBI actions—some growth would have happened anyway. Also, the issue of deposit quality remains.
This year, the RBI has helped by cutting the repo rate by 100 basis points (1%) and adding a lot of liquidity to the system. But the report warns that this may not fully solve the current credit slowdown.
Just like the deposit problem, weak credit growth is tied to underlying issues in the real economy, not just interest rates or bank policies.
