Mumbai: Reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday downplayed concerns over the impact of rising US tariffs on India’s economy, stating that the effects would remain limited unless retaliatory measures come into play — which the central bank does not anticipate.
Speaking at a press briefing following the RBI’s monetary policy announcement, Malhotra said, “There might not be a major impact of the ongoing uncertainty over the US tariffs on India’s economy. This is subject to retaliatory tariffs coming into the picture, which we do not foresee.”
He expressed hope that trade tensions between India and the United States would be resolved amicably.
The RBI has already adjusted its GDP growth forecast for the current fiscal year, lowering it from 6.7% to 6.5% in light of global uncertainties, including potential trade disruptions.
Addressing concerns about foreign exchange stability, Malhotra assured that India’s forex reserves remain strong, currently sufficient to cover 11 months of imports. “We are confident of meeting our needs from the external sector,” he said.
On the question of inflation risks stemming from reduced imports of Russian oil, the RBI chief noted that India’s crude supply is diversified.
“We are taking oil from many other countries, not just Russia,” he said, adding that any change in the supply mix would have to be assessed in the context of global crude prices and how the government manages potential price shocks through fiscal tools such as excise duties.
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“At this point, we do not see any major impact on inflation,” Malhotra said.
“If there is any shock, we believe the government will take the appropriate decision on the fiscal side.”
RBI Deputy Governor Poonam Gupta also downplayed inflation concerns, explaining that almost 50% of India’s inflation basket is composed of food items, which are not directly affected by international developments.
“The impact on inflation is likely to be very limited,” she added.
