Amid rising global trade tensions and a fresh diplomatic strain, Reserve Bank of India (RBI) Governor Sanjay Malhotra has confidently dismissed U.S. President Donald Trump’s recent criticism of the Indian economy. In response to Trump’s branding of India as a “dead economy,” Malhotra stated that India is, in fact, performing robustly — contributing more to global growth than the United States itself.
“India is doing very well. Our contribution to global growth is over 11%, which is more than the U.S.,” Malhotra told reporters during a press briefing at the RBI headquarters in New Delhi.
The governor’s remarks come on the heels of Trump’s renewed threats to ramp up tariffs on Indian goods, citing continued oil trade with Russia and military hardware purchases as primary irritants. In a sharp counterpoint, Malhotra expressed optimism about India’s economic outlook, reinforcing the country’s solid fundamentals and resilience.
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India’s Growth Outpaces Global Trends
India’s economy is projected to grow at 6.5% in FY25 — more than double the International Monetary Fund’s global growth estimate of around 3%. Malhotra noted that India has historically averaged around 7.8% annual growth and still aspires for even higher economic momentum.
“Despite ongoing global volatility and shifting geopolitical alliances, the Indian economy remains fundamentally strong,” said Malhotra.
The central bank’s current growth forecast reflects confidence in rising domestic consumption, favourable monsoon predictions, and a steady recovery in rural and agricultural sectors.
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RBI Holds Repo Rate at 5.50% Amid Trade Tensions
In its latest monetary policy decision, the RBI’s Monetary Policy Committee (MPC) unanimously voted to keep the benchmark repo rate unchanged at 5.50%. This marks a cautious approach amid escalating trade friction with the United States.
This pause follows an earlier surprise rate cut of 50 basis points in June — the third rate revision since February.
The decision triggered a dip in interest rate-sensitive stocks. Key players in the auto, real estate, and banking sectors recorded declines of up to 5% on the Bombay Stock Exchange (BSE), reflecting investor caution over Trump’s tariff escalation and potential retaliatory measures.
Among the notable stock movements:
- Bosch declined 4.85% to ₹38,617.75
- Hyundai Motor India dropped 1.95% to ₹2,146.15
- HeroMoto Corp slipped 1.31% to ₹4,482.60
- Apollo Tyres fell 1.07% to ₹435.10
- Mahindra & Mahindra edged down 0.83% to ₹3,183.50
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No Major Impact from Tariffs — Yet, Says RBI Chief
Malhotra played down the immediate impact of U.S. tariff hikes on the Indian economy, stating, “Unless retaliatory tariffs are introduced, we don’t foresee any major disruption.”
Still, he acknowledged the fragile nature of global trade dynamics, emphasizing the importance of diplomacy and open channels of communication. “We are hopeful for an amicable resolution,” he added.
India’s Place in a Changing Global Order
Malhotra concluded with a broader reflection on India’s evolving role in the global economy:
“Trade headwinds persist, but India is well-positioned. We’ve implemented forward-thinking reforms that will continue to support sustainable growth.”
His reassurance serves not only as a direct rebuttal to Trump’s disparaging remarks but also as a signal to markets and international observers that India remains on a steady economic path despite geopolitical tremors.
