RBI Governor Sanjay Malhotra Responds to Trump’s ‘Dead Economy’ Remark: ‘India Growing More Than US’

RBI Governor Sanjay Malhotra Responds to Trump’s ‘Dead Economy’ Remark: It was said during Sanjay Malhotra, the governor of Reserve Bank of India on Wednesday that the Indian economy is doing very well and contributes more to global growth as compared with US, something that came just after US President Donald Trump said that India is a dead economy.

"We are contributing about 18%, which is more than the US where the contribution is expected to be much less – about 11% or something. We are doing very well and we will continue to improve further," Sanjay Malhotra said, responding to a question over the recent remarks of Trump, news agency PTI reported.

India will increase by 6.5 percent, compared with the expectation of around 3 percent global growth next year by the International Monetary Fund (IMF), Malhotra said at the headquarters of the central bank in New Delhi.

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Malhotra commented that the target or aspirational growth level in India must be something above 6.5% that RBI has declared as the expectancy in FY25 and every year the country has increased by 7.8% on average in the past.

The monetary policy committee of the RBI that held its meeting on Wednesday on the repo rate charged as the central bank left the policy rate unchanged at 5.50 percent in the face of emerging uncertainty in economic forecast that has come in the wake of the escalating trade tensions with the United States President Donald Trump.

The RBI action was decided after the six-member Monetary Policy Committee (MPC) of the central bank voted unanimously in favor of keeping the repurchase rate unchanged following a 50-basis-point unexpected cut last month, the third so far this year.

Malhotra resolved the issues of the increased threats by Donald Trump to execute higher tariffs on Indian imports because of the continued Indian buying of Russian crude oil.

“We don't see a major impact of US tariffs on the Indian economy unless there is a retaliatory tariff,” Sanjay Malhotra said, adding, “We are hopeful that we will have an amicable solution.”

Malhotra recognized the changing world of trade but believed that India will take much interest in the progress of the economy.

“Global trade challenges remain, but the Indian economy holds bright prospects in the changing world order. We have taken decisive and forward-looking measures to support growth,” he said.

A strong domestic demand, healthy monsoon rains forecast, and agriculture and rural consumption continue to move to the recovery phase should push the GDP growth in the next quarters.

Nevertheless, the trade tensions have been increased after Trump opted on the tariff rhetoric. The US President said on Tuesday that duties would be raised significantly on Indian goods and in addition, an earlier ruling to raise tariff rates of goods (from 10 per cent to 25 per cent) would be enforced on Thursday.

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There also was a threat of an independent sanction regarding the Indian acquisition of Russian military equipment and oil.

Trump had even taken this a step further last week by terming India a dead economy, something that cannot be taken lightly by Indian political circles as well as trade circles.

Auto, realty, and bank stocks sensitive to interest rates fall due to the decision of RBI to hold rates at current levels.

Auto stocks, realty and bank stocks fell 5 per cent on Wednesday as policymakers contemplated the risks presented in Donald Trump trade policies after RBI maintained its policy interest rate on Wednesday.

Bosch scrip eroded 4.85 per cent to 38,617.75, Hyundai Motor India slipped 1.95 per cent to 2,146.15, HeroMoto Corp declined 1.31 per cent to 4,482.60, Apollo Tyres lost 1.07 per cent to 435.10 and Mahindra & Mahindra lost 0.83 per cent to 3,183.50 on the BSE.

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