The Reserve Bank of India (RBI) Governor Sanjay Malhotra today indicated that the central bank does not foresee a “major impact” of the recent US tariffs on the Indian economy, provided there are no retaliatory tariffs from India. This assessment was made during a press conference following the Monetary Policy Committee (MPC) meeting on August 6 (Wednesday), where the key repo rate was kept unchanged at 5.5%.
Governor Malhotra’s statement implicitly blunts the US President’s recent “dead economy” jibe against India. While acknowledging the “uncertainties of tariffs” and their evolving nature, the RBI has maintained India’s GDP growth forecast for the financial year 2025-26 at a robust 6.5%.
“On growth, you are very well aware that we had already reduced our forecast, which was earlier, 6.7% to 6.5% so some of the global uncertainties have already been factored in the revised growth forecast,” Governor Malhotra publicly stated. He added, “However, there is still a lot of uncertainty… and it’s really very difficult to predict as to what the impact will be. Going forward… we will maintain a very, very close vigil on the incoming data and take a call as of now, we do not have sufficient data to revise our GDP forecasts.”
The Governor also highlighted India’s relative independence from external factors concerning inflation. He conveyed that India is “less dependent on the outside as far as inflation is concerned,” suggesting that the impact of external trade disruptions on domestic prices might be limited.
The MPC’s decision to keep the repo rate unchanged and maintain a neutral stance reflects a cautious but confident approach. This stance allows the central bank to monitor the unfolding impact of global trade tensions while ensuring that previous rate cuts continue to transmit through the economy. The RBI’s commitment remains focused on maintaining price stability while supporting sustainable economic growth.
