Reserve Bank of India Governor Sanjay Malhotra slammed President Donald Trump on his controversial remark calling India a ‘dead economy.’ He asserted that India is contributing to the global economy at its best.
Malhotra stated to the reporters in New Delhi, “We are contributing about 18%, which is more than the US where the contribution is expected to be much less, about 11% or something. We are doing very well, and we will continue to improve further.”
India’s Economic Outlook Remains Strong
Malhotra emphasized that India’s projected growth rate of 6.5% for FY25 stands in sharp contrast to the IMF’s global forecast of around 3%, reinforcing India’s strong economic position.
He also highlighted India’s long-term performance, noting the country’s average annual growth of 7.8% in recent years. Malhotra added that India should aim to exceed the 6.5% target, reinforcing a vision of continued upward momentum.
RBI Holds Interest Rates Amid Global Uncertainty
Same day, the RBI’s Monetary Policy Committee (MPC) voted to maintain the key repo rate at 5.50% unanimously. This is followed after a 50-basis-point cut in June, the third since February, as the central bank navigates an unsteady global environment.
This decision comes in the light of Trump’s threats to impose higher tariffs on Indian imports, partly due to India’s continued purchase of Russian oil.
Minimal Impact Expected from Tariff Threats
Malhotra reassured markets by saying, “We don’t see a major impact of US tariffs on the Indian economy unless there is a retaliatory tariff,” while expressing optimism about a peaceful resolution: “We are hopeful that we will have an amicable solution.”
India’s Resilience Amid Global Trade Challenges
Even though there are rising trade concerns, Malhotra asserts that the global trade challenge remains but the Indian economy holds bright prospects in the changing world order.
India’s outlook remains positive, buoyed by strong domestic consumption, expectations of above-average monsoon rainfall, and a recovery in rural and agricultural sectors, all of which are expected to drive GDP growth in the near term.
Trump’s Sanctions and Tariff Escalations
US President recently announced plans to increase duties on Indian products from 10% to 25%. These new rates will be effective from Thursday onwards. Additionally, Trump has warned of penalties targeting Russian oil purchases by India.
In a further escalation, Trump called India a ‘dead economy’, a remark that has sparked strong reactions from Indian leaders and trade experts.
Stock Markets React to RBI’s Decision
Following the RBI’s decision to hold interest rates steady, stocks in rate-sensitive sectors such as auto, banking, and real estate took a hit. Companies like Bosch, Hyundai Motor India, and HeroMoto Corp saw declines ranging from 1% to nearly 5% on the BSE.
