During the Monetary Policy Committee (MPC) meeting held between February 5 and February 7, MPC member Dr. Nagesh Kumar noted that it is too early to expect that India will be spared from the fallout of tariffs imposed by the United States.
While tariffs are directed at countries like Mexico, Canada, and China, he warned that India might not remain unaffected in this global trade upheaval. His remarks reflect growing concerns about the protectionist policies being adopted worldwide, which have triggered fears of a global economic slowdown.
RBI’s minutes revealed that while high-frequency indicators show resilience in world trade, the global economy is still struggling with slower-than-expected growth, geopolitical tensions, and policy uncertainties.
Dr. Kumar added that the external environment has become increasingly challenging due to subdued global economic performance, weaker trade, and investment growth.
He noted that these factors, combined with volatility in emerging market currencies and financial markets, pose considerable risks to India’s growth trajectory. As for the near-term economic outlook, India’s GDP growth is projected at 6.7% for 2025-26, with a cautious balancing of risks tied to international economic conditions.RBI also examined the potential impacts of protectionist trade measures. Saugata Bhattacharya pointed out that the friction in global trade and the uncertainty over the responses from global central banks are key risks that could complicate domestic policy decisions.
He also noted that excessive monetary tightening could further hinder growth, emphasising the balance between inflation control and economic growth.
Professor Ram Singh also contributed to the discussion, highlighting that subdued private consumption, driven by low real wage growth, is contributing to the slowdown, and that overly restrictive monetary policies have exacerbated the issue by reducing credit growth.
