RBI Governor Highlights Impact of Global Trade Policies on Indian Economy

Market Performance

In its latest policy update on April 9 Reserve Bank of India, implemented a 25 basis point cut in the repo rate. Alongside this move, the central bank revised India’s GDP growth projection for the financial year to 6.5 percent, down from the previous estimate of 6.7 percent announced in February. The inflation forecast was also adjusted, with the revised figure set at 4 percent compared to the earlier estimate of 4.2 percent.

Main News

During the policy announcement, RBI Governor Malhotra addressed the global economic outlook, stating that recent trade tariff measures introduced by U.S. President Donald Trump have increased uncertainty across international markets. This has resulted in a decline in the dollar index, equity market sell-offs, and a noticeable drop in bond yields and crude oil prices.

Malhotra indicated that the rising unpredictability around tariffs may lead to depreciation pressures on the Indian rupee and could elevate import-driven inflation. He cited ongoing global trade protectionism, potential currency tensions, and elevated global oil prices as additional contributors to this pressure.

Economic Commentary

According to the RBI governor, domestic growth is currently on a recovery path, although a challenging external environment has disrupted this momentum. He noted that rural consumption remains steady, and indications of a potential recovery in urban demand could help sustain overall growth.

On the export front, Malhotra said that goods exports may face hurdles due to the uncertain international climate. However, he added that services exports are expected to maintain their resilience.

From a supply-side perspective, agricultural prospects appear favorable, industrial activity improves gradually, and the services sector shows ongoing strength. Despite this, risks from global trade disruptions still pose challenges to sustained growth.

Summary

The central bank’s latest decisions reflect growing concerns over global economic developments and their possible effects on India. The RBI has taken steps to support the domestic economy through policy easing and revised projections. The key figures from the announcement include:

• Repo Rate: Reduced by 25 basis points
• GDP Growth Forecast: 6.5 percent (previously 6.7 percent)
• Inflation Outlook: 4 percent (previously 4.2 percent)

Governor Malhotra emphasized that a supportive policy stance is necessary as the economy recovers amidst persistent global uncertainties.