RBI Governor Responds to Trump’s Remarks on Indian Economy
Reserve Bank of India Governor Sanjay Malhotra has expressed strong confidence in India’s economic performance, dismissing recent critical remarks by US President Donald Trump, who labeled India as a “dead economy.” Malhotra emphasized that India’s contribution to global economic growth surpasses that of the US.
“We contribute about 18% to global growth, which is higher than the US’s estimated contribution of around 11%,” Malhotra stated, reaffirming India’s robust economic position.
India’s Growth Forecast and Economic Outlook
India is projected to grow at a rate of 6.5% in 2025, significantly higher than the IMF’s global growth estimate of 3% for the same year. Malhotra noted that India’s aspirational growth should exceed this projection, recalling that the country’s historical average growth rate has been about 7.8% annually.
Despite rising international trade tensions, the RBI decided to keep the key repo rate steady at 5.50% during its recent Monetary Policy Committee meeting, maintaining a cautious but optimistic stance.
Impact of US Tariffs and Trade Relations
Addressing concerns about the escalating trade conflict triggered by US tariffs on Indian goods, Malhotra remarked that the Indian economy would not face significant disruption unless India faces retaliatory tariffs. “We remain hopeful for a friendly resolution,” he added.
The US has increased tariffs on Indian imports from 10% to 25%, with threats of further penalties linked to India’s purchases of Russian oil and military equipment, adding complexity to the trade scenario.
Domestic Factors Supporting Growth
Malhotra highlighted several domestic strengths that underpin India’s growth outlook, including:
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Strong domestic demand
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Forecast of above-average monsoon rains
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Recovery in agriculture and rural consumption
These factors are expected to sustain India’s GDP growth in the near term despite global uncertainties.
Market Reaction to RBI’s Policy Decision
Following the RBI’s announcement to hold interest rates, stocks sensitive to rate changes—including auto, realty, and banking sectors—experienced a decline. Notable stock movements on the BSE included:
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Bosch down 4.85% to ₹38,617.75
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Hyundai Motor India down 1.95% to ₹2,146.15
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Hero MotoCorp down 1.31% to ₹4,482.60
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Apollo Tyres down 1.07% to ₹435.10
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Mahindra & Mahindra down 0.83% to ₹3,183.50
Key Takeaways:
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RBI Governor Sanjay Malhotra affirms India’s growing role in global economic growth
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India’s GDP growth forecast at 6.5% for 2025, outpacing global average
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US tariff hikes add uncertainty, but RBI expects limited economic impact without retaliation
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Strong domestic demand and agriculture recovery support economic resilience
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Rate-sensitive sectors saw market declines after RBI held interest rates steady
