Reserve Bank of India (RBI) Governor Sanjay Malhotra reassured that India’s economy, being largely driven by domestic factors, is well-equipped to withstand the impact of US tariffs imposed during President Donald Trump’s tenure. Malhotra conveyed this message during the IMF and World Bank Fall Meetings in Washington, DC, emphasizing that while India is affected by the tariffs, it is not a major cause for alarm.
Addressing the IMF’s Governor Talks session, Malhotra highlighted the resilience of India’s macroeconomic fundamentals amidst the prevailing global uncertainties. He acknowledged the challenges posed by policy uncertainties and emphasized the importance for emerging market economies to remain vigilant in such scenarios.
Malhotra also mentioned the possibility of a positive outcome in trade negotiations with the US, expressing optimism after discussions with the Indian team involved in the talks. He indicated a potential for improvement if both parties reach a mutually beneficial understanding.
Regarding the Indian rupee’s recent fluctuations due to the tariff measures, Malhotra reiterated the RBI’s stance of not targeting a specific exchange rate. He emphasized the importance of market forces in determining the rupee’s value and mentioned the RBI’s interventions to maintain orderly movement and prevent excessive volatility. The rupee has been supported by the RBI’s interventions, preventing it from breaching its historical low of 88.80.
The minutes from the latest RBI monetary policy committee (MPC) meeting revealed that all six members, including Governor Sanjay Malhotra, voted to maintain the repo rate at 5.5 percent. Despite benign domestic inflation, the committee cited global uncertainties as a key factor in their decision. The next MPC meeting is scheduled for December 3–5.
During the MPC meeting, Governor Malhotra noted the downward revision in inflation forecasts, providing room for further policy support to boost economic growth. While acknowledging the potential for a rate cut, he believed that the current economic conditions did not warrant such a move for optimal impact. Malhotra emphasized the importance of sustaining growth-friendly conditions through monetary policy adjustments.
The RBI continues its efforts to ensure stability in the face of global economic challenges, with a focus on supporting India’s economic growth trajectory.