RBI's Stance on Tariffs and Growth

RBI governor Sanjay Malhotra expressed concerns over the potential slowdown in growth due to tariffs imposed by the US, highlighting that inflation is not the primary worry at this juncture. The uncertainty surrounding trade policies is expected to dampen global economic growth, affecting investment and spending decisions.

Impact on Global and Domestic Economy

Malhotra pointed out that the direct impact of these tariffs on India might be less severe compared to other nations, thanks to a lower share of exports in GDP. However, the indirect effects through global trade frictions could hinder domestic growth and negatively affect net exports.

Future Projections and Policy Measures

With global GDP growth forecasts revised downwards by 20-30 basis points, Malhotra has adjusted India's growth and inflation projections for 2025-26 to 6.5% and 4%, respectively. He also hinted at possible rate cuts, given the downward trend in inflation and real rates.

The RBI's previous rate adjustments took 6-9 months to influence the economy, suggesting that any new policy changes will also require time to manifest their full effects.