Reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday said that the recent US tariff hike is not expected to have a major impact on the Indian economy, unless retaliatory tariffs come into play.
Addressing a press conference following the 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 added, “We are hopeful that we will arrive at an amicable solution,” when asked about the growing trade tensions between India and the US.
Malhotra also pointed out that the RBI had already revised its GDP growth forecast downward to 6.5 per cent from 6.7 per cent, factoring in some of the global uncertainties.
Reassuring investors about the country’s external sector resilience, he said the RBI is confident that its foreign exchange reserves are sufficient to finance up to 11 months of imports. “We are confident of meeting our needs from the external sector,” he said.
On concerns about domestic inflation if India reduces its purchase of Russian oil, the RBI Governor clarified that India sources oil from a wide range of countries, not just Russia.
“Let’s keep two things in mind: it’s not only Russian oil that we are buying. We are sourcing oil from many countries. If the mix changes, the impact on prices will depend on global crude prices and the extent to which the government absorbs that impact through excise duties or other tariffs. As of now, we do not foresee any major impact on inflation, as we expect the government to take appropriate fiscal measures in the event of a price shock,” he said.
RBI Deputy Governor Poonam Gupta added, “The impact on inflation is likely to be very limited. Nearly half of our inflation basket consists of food, which is not directly affected by global developments.”
—IANS