How Will US Tariff Hike Affect India? RBI Governor Comments

Mumbai (The Uttam Hindu): Reserve Bank of India Governor Sanjay Malhotra said on Wednesday that the US tariff hike will not have any major impact on the Indian economy unless any retaliatory tariffs are imposed.

In a press conference after the monetary policy announcement, the RBI Governor said, "The ongoing uncertainty over US tariffs may not have any major impact on the Indian economy. It depends on the imposition of retaliatory tariffs, which we do not expect." When asked to comment on the growing trade tension between India and the US, he said, "We hope that we will find an amicable solution." RBI Governor Malhotra also informed that the RBI has already lowered its GDP growth forecast from 6.7 percent to 6.5 percent, taking into account some global uncertainties.

He further said that the RBI is confident that its foreign exchange reserves are sufficient for 11 months of imports. He said, "We are confident of meeting our needs from the external sector." On the possible impact of India reducing its purchase of Russian oil on domestic inflation, he said that it is important to keep in mind that India buys oil not only from Russia but also from many other countries. He further said, "We have to keep in mind two things, firstly, we are taking oil not only from Russia but also from many other countries. If there is a change in the mix, then the impact on its prices will depend on what will be the global commodity prices of crude oil. Secondly, how much of this impact is borne by the government in the form of excise duty and other tariffs, it will depend on this. So, at the moment we do not see any major impact on inflation because I think if there is a 'price shock', the government will take appropriate decision on the fiscal side." RBI Deputy Governor Poonam Gupta said, "Its impact on inflation is likely to be very limited. Food items constitute almost half of our inflation basket, which is not directly affected by global developments."