Days after former US President Donald Trump referred to India as a “dead economy,” Reserve Bank of India Governor Sanjay Malhotra confidently responded by stating that India’s economic performance is strong and that the country is contributing more to global growth than the United States.
Speaking to reporters at the RBI headquarters in New Delhi, Malhotra said India is currently contributing about 18 percent to global growth, compared to the United States’ expected contribution of around 11 percent. He added that the Indian economy is doing well and is on track for further improvement.
India is projected to grow at a rate of 6.5 percent in the upcoming fiscal year, while the International Monetary Fund has estimated global growth at roughly 3 percent for the same period. Malhotra also pointed out that India has maintained an average annual growth rate of 7.8 percent in previous years. He emphasized that the aspirational growth rate should be even higher than the RBI’s 6.5 percent forecast for FY25.
On Wednesday, the RBI decided to keep the repo rate unchanged at 5.50 percent, taking into account the uncertainty brought about by increasing trade tensions with the United States following President Trump’s statements.
The Monetary Policy Committee of the RBI, consisting of six members, voted unanimously to maintain the current rate. This decision followed a surprise 50 basis point cut in June, which was the third such reduction since February.
Addressing Trump’s threats to impose higher tariffs on Indian imports, especially due to India’s continued purchase of Russian crude oil, Malhotra stated that the RBI does not anticipate a significant economic impact unless there is a retaliatory measure. He expressed optimism that a peaceful and practical solution could be reached.
Malhotra acknowledged the changing dynamics of global trade but remained confident in India’s prospects. He said that while global trade challenges continue, India remains well-positioned with sound economic fundamentals and has taken proactive steps to support growth.
He cited strong domestic demand, the possibility of above-average monsoon rainfall, and a steady recovery in rural consumption and agriculture as factors expected to support GDP growth in the coming months.
Despite this positive outlook, Trump’s aggressive trade policies have heightened tensions. On Tuesday, he announced plans to substantially raise tariffs on Indian goods, building on an earlier decision to hike import duties from 10 percent to 25 percent. He also warned of additional penalties over India’s defense and energy deals with Russia.
Trump’s “dead economy” comment sparked criticism from Indian political leaders and business circles alike.
Following the RBI’s decision to maintain interest rates, stocks in interest rate-sensitive sectors such as automobiles, real estate, and banking experienced notable declines.
Bosch fell 4.85 percent to trade at ₹38,617.75
Hyundai Motor India declined 1.95 percent to ₹2,146.15
HeroMoto Corp slipped 1.31 percent to ₹4,482.60
Apollo Tyres dropped 1.07 percent to ₹435.10
Mahindra and Mahindra edged down 0.83 percent to ₹3,183.50 on the BSE
These movements reflect investor concerns amid global trade uncertainties and domestic policy decisions.
