Lagatar24 Desk
New Delhi: RBI governor Sanjay Malhotra on Wednesday cautioned that the US-imposed 50% tariffs on Indian exports will weigh on India’s growth momentum, even as he expressed confidence in the economy’s resilience. Presenting the monetary policy review, he said growth in the second half of FY2025-26 could decelerate due to global trade uncertainties, though domestic factors will cushion the impact.
Tariff And Trade Risks
Malhotra highlighted that 25% of the tariffs are ‘reciprocal’ while another 25% stem from India’s crude oil imports from Russia, creating a difficult situation for exporters. He added that GST rate cuts announced recently will not be sufficient to counterbalance the tariffs’ impact. “The MPC noted that growth outlook remains resilient supported by domestic drivers, despite weak external demand. A favourable monsoon, easing inflation, and GST reforms will provide support, but trade-related headwinds remain a concern,” he said.
GDP Growth Projections Revised
RBI revised its growth estimates, projecting real GDP growth for FY2025-26 at 6.8%. Quarterly estimates stand at 7.0% in Q2, 6.4% in Q3, and 6.2% in Q4. For Q1 of FY2026-27, growth is forecast at 6.4%. “The risks are evenly balanced, but growth continues to remain below aspirations,” Malhotra said, pointing to trade-related uncertainties and volatility in global markets.
Repo Rate Decision
The Monetary Policy Committee, led by Malhotra, unanimously kept the repo rate unchanged at 5.5%. He explained that while inflation has eased and fiscal measures are providing support, the MPC preferred to wait for the cumulative impact of earlier rate actions to play out. “Despite an external environment that has deteriorated since the August policy, the Indian economy remains poised to register high growth,” he stressed, underscoring the RBI’s focus on price stability alongside growth support.
