RBI Governor Sanjay Malhotra said that the US tariff hike will not have any major impact on the Indian economy
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MUMBAI — Reserve Bank of India Governor Sanjay Malhotra said on Wednesday that the US tariff hike will not have any major impact on the Indian economy unless there is a retaliatory tariff.
Speaking at a press conference after the monetary policy announcement, the RBI Governor said, "There might not be a major impact of the ongoing uncertainty over the US tariffs on India's economy. This is subject to retaliatory tariffs coming into the picture, which we do not foresee."
"We are hopeful that we will have an amicable solution," he said when asked to comment on rising trade tensions between India and the US.
Malhotra also pointed out that the RBI had already scaled down its GDP growth forecast to 6.5 per cent from 6.7 per cent to factor in some of the global uncertainties.
He further stated that the RBI is confident that its foreign exchange reserves are enough to finance 11 months of imports. "We are confident of meeting our needs from the external sector," he remarked.
On the possible impact of domestic inflation if India reduces its purchases of Russian oil, Malhotra said it was important to keep in mind that India bought oil from many countries, not just Russia.
"Let's keep two things in mind: it's not only Russian oil that we are taking. We are taking oil from many other countries. If the mix changes, what is its impact on prices? What are the global commodity prices of crude? It will depend on all that. And the other thing it will depend on is how much of its impact, downwards or upwards, is taken by the government in the form of excise duties and other tariffs. So, we don't see any major impact, as of now, because of this on inflation because I think the government will take an appropriate decision on the fiscal side in case there is any price shock," he added.
RBI Deputy Governor Poonam Gupta said, "The impact on inflation is likely to be very limited. Nearly half of our inflation basket consists of food, which does not get impacted directly by global developments."