“UNCERTAINTIES”
Economists project that Trump’s tariffs drive will impact India’s GDP growth, with analysts at Goldman Sachs reducing their forecast for the current fiscal year from 6.3 to 6.1 per cent.
The RBI’s monetary policy committee (MPC) said in a statement that “recent trade tariff related measures” had “exacerbated uncertainties” and clouded the “economic outlook across regions”.
“In such challenging global economic conditions, the benign inflation and moderate growth outlook demands that the MPC continues to support growth,” the statement added.
India’s central bank cut interest rates for the first time in nearly five years in February 2024, as it sought to boost an economy that has been weighed down by muted urban consumer sentiment, a sluggish manufacturing sector and lower government expenditure.
The Indian economy is projected to have grown at 6.5 per cent in the last fiscal year, its slowest pace since the COVID-19 pandemic and down from 9.2 per cent in 2023-24.
New Delhi has responded cautiously to Trump’s chaotic trade policies so far.
The Department of Commerce last week said it was examining both “implications” and “opportunities” after rival manufacturing competitors were harder hit by Trump’s hike in duties.
New Delhi and Washington are currently negotiating a bilateral trade agreement, the first tranche of which they hope to finalise by autumn this year.
