RBI Governor Sanjay Malhotra Confident in India’s Growth Despite Trump’s ‘Dead Economy’ Remarks

RBI Governor Responds to Trump’s Criticism

Reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday confidently rejected US President Donald Trump’s recent remarks describing India as a “dead economy.” Malhotra highlighted that India’s economic contribution to global growth is currently around 18%, surpassing the United States, which is projected to contribute roughly 11%.

India’s Strong Growth Outlook

Malhotra emphasized that India is performing very well and expects this positive trend to continue. He stated that India’s projected GDP growth rate for 2025 is approximately 6.5%, significantly higher than the 3% global growth forecasted by the International Monetary Fund (IMF).

The RBI governor added that India should aim for an even higher growth rate than 6.5%, referencing the country’s historic average growth of 7.8% annually over recent years.

RBI Keeps Repo Rate Unchanged Amid Trade Uncertainty

In response to rising trade tensions with the United States, the RBI’s Monetary Policy Committee (MPC) unanimously decided to keep the key repo rate steady at 5.50%. This move follows a surprise 50 basis-point rate cut in June, the third reduction since February 2025.

Impact of US Tariffs and Trade Tensions

Malhotra addressed concerns over US tariffs imposed due to India’s ongoing purchases of Russian crude oil. He reassured that the Indian economy is unlikely to face major impacts from these tariffs unless there is a retaliatory trade action from India. He expressed hope for an amicable resolution between the two countries.

Positive Domestic Factors Supporting Growth

Despite global trade challenges, Malhotra remains optimistic about India’s economic prospects. Factors like robust domestic demand, an above-average monsoon forecast, and the recovery in agriculture and rural consumption are expected to sustain growth in the upcoming quarters.

Market Reaction to RBI Policy Decision

Following the RBI’s rate decision, shares of interest rate-sensitive sectors such as auto, real estate, and banking declined by approximately 5%. Notable stock movements included:

• Bosch: down 4.85%
• Hyundai Motor India: down 1.95%
• Hero MotoCorp: down 1.31%
• Apollo Tyres: down 1.07%
• Mahindra & Mahindra: down 0.83%

Summary of Key Points:

• RBI Governor Sanjay Malhotra refutes Trump’s “dead economy” claim
• India contributes 18% to global growth, higher than the US’s estimated 11%
• India’s GDP expected to grow at 6.5% in 2025, above global average
• RBI holds repo rate at 5.50% amid trade tensions
• US tariffs on India pose limited risk unless met with retaliation
• Domestic demand and favorable monsoon support positive economic outlook
• Market sectors sensitive to interest rates see share price declines after RBI decision