Reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday dismissed US President Donald Trump’s recent remarks branding India a “dead economy,” asserting that India is, in fact, outpacing global growth and making a greater contribution to the world economy than the US.
“We are contributing about 18% to global growth, which is more than the US where the contribution is around 11%,” Malhotra said, speaking at a press briefing at the central bank headquarters in New Delhi.
According to the RBI, India’s economy is expected to grow 6.5% in FY25, compared to the International Monetary Fund’s (IMF) global forecast of 3%.
RBI Keeps Repo Rate Unchanged at 5.50%
The RBI maintained the benchmark repo rate at 5.50% in its most recent monetary policy review, noting persistent market uncertainty and tensions in global trade.
The move comes after a surprise 50-basis-point cut in June, the third since February. All six members of the Monetary Policy Committee (MPC) voted unanimously in favor of maintaining the current rate. Malhotra restated that the external environment, especially Trump’s growing trade threats, continues to be a concern even though India’s macroeconomic indicators are still robust.
Also Read: RBI Chief Sanjay Malhotra Hits Back at Trump’s ‘Dead Economy’ Dig at India
India vs Trump: Tariffs, Trade & Crude Oil
Trump’s recent statements threatening to substantially hike tariffs on Indian goods, particularly in retaliation for India’s ongoing crude oil imports from Russia, have added strain to bilateral trade ties.
“We don’t see a major impact of US tariffs on the Indian economy unless there is a retaliatory tariff,” Malhotra noted. “We are hopeful of an amicable solution.”
Trump had also warned of penalties on India’s defense ties with Russia, adding to the political and economic tension. These remarks come after he controversially called India a “dead economy,” which infuriated Indian leaders and trade experts.
Domestic Demand, Monsoon to Support Growth
India’s internal foundations are still solid despite external turmoil. Malhotra identified three major factors that are anticipated to maintain momentum in the upcoming quarters: strong consumer demand, above-normal monsoon expectations, and a recovery in rural spending. He added that India has maintained an average annual growth rate of 7.8% over the past few years, with aspirations to exceed the 6.5% projection in FY25.
Auto, Realty & Banks Decline
Interest rate-sensitive industries had a precipitous drop on the Bombay Stock Exchange (BSE) after the RBI’s announcement:
- Bosch fell 4.85% to ₹38,617.75
- Hyundai Motor India dropped 1.95% to ₹2,146.15
- HeroMoto Corp dipped 1.31% to ₹4,482.60
- Apollo Tyres declined 1.07% to ₹435.10
- Mahindra & Mahindra slid 0.83% to ₹3,183.50
The fall was ascribed by market observers to the uncertainty created by the US tariff threats and the RBI’s decision to put a hold on rate lowering.
