The Reserve Bank of India (RBI) Governor, Sanjay Malhotra, has expressed greater concern over the impact of US-imposed tariffs on India’s economic growth than on inflation.
He made this statement while addressing the media after the Monetary Policy Committee (MPC) meeting held on Wednesday.
The RBI has announced a cut in the repo rate by 25 basis points, bringing it down from 6.25 per cent to 6 per cent. This marks the first policy action of the new financial year.
The move comes at a time when inflation is under control, but India’s economic growth is facing pressure due to rising global uncertainties, especially after fresh tariffs were introduced by the United States under President Donald Trump’s administration.
Governor Malhotra explained that the downward revision in India’s GDP growth forecast for the financial year 2025–26 was driven largely by external factors.
He highlighted the growing trade tensions and tariff increases across the globe, particularly from the US, as major concerns that could impact India’s export performance and wider economic activity.
He stated, “We are more worried about the impact on growth than on inflation.” While inflation levels have eased and remain well within the RBI’s target range, the Governor warned that disruptions in global trade could have a negative effect on India’s overall economic outlook.
Malhotra noted that the RBI would continue to monitor both inflation and growth carefully. He added that the central bank and the government would work closely in the coming months to ensure macroeconomic stability.
“The government and RBI will jointly manage the challenges to maintain stability in the economy,” he said, emphasising the importance of policy coordination during uncertain times.
Although concerns about the global economic environment persist, the Governor reassured that the direct effect of the US tariffs on India is not expected to be severe.
“The impact of tariffs is much less on India than on some other countries,” he said. However, he cautioned that if broader trade restrictions were to increase, India’s exports could still face difficulties.
On the matter of currency, Malhotra mentioned that the Indian rupee has remained relatively stable in recent months, even as other global currencies experienced volatility due to trade disputes.
He also reaffirmed that the RBI holds sufficient foreign exchange reserves to manage any potential pressures on the rupee, if required.
Follow us
