RBI Governor Counters Trump’s ‘Dead Economy’ Jibe, Says India Outpacing US in Global Growth Contribution
Amid heightened diplomatic and trade tensions with the United States, Reserve Bank of India (RBI) Governor Sanjay Malhotra has strongly defended India’s economic performance, saying the country is not only thriving but also contributing more to global economic growth than the U.S.
His remarks came just days after former U.S. President Donald Trump referred to India as a “dead economy,” drawing widespread criticism and triggering a wave of official responses from New Delhi.
Speaking at a press briefing following the RBI’s monetary policy review on Wednesday, Malhotra emphasized that India’s contribution to global growth is currently around 18%, significantly higher than that of the United States, which is projected at about 11%.
We are doing very well, and we will continue to improve further,” Malhotra said. “India is contributing significantly to the global economy, and our performance has been consistent and robust despite external challenges.”
India’s Growth Amid Global Uncertainty
The RBI has retained its GDP growth forecast at 6.5% for the ongoing fiscal year 2024–25, in line with the International Monetary Fund (IMF) projections, which suggest a global growth rate of just 3%.
Malhotra stressed that India’s aspirational growth rate should ideally be even higher, pointing out that the country has witnessed an average annual growth of 7.8% over the past several years. Our economy is resilient.
We are not only growing but outperforming global peers in terms of contribution, consistency, and potential,” the RBI chief said.
India’s robust domestic demand, improving rural consumption, and positive agricultural outlook—aided by forecasts of above-average monsoon rains—are expected to bolster economic activity in the coming quarters.
These internal growth drivers, Malhotra suggested, will help insulate the economy against potential shocks from global trade tensions.
Monetary Policy: Stability Amid Uncertainty
In its August policy review, the RBI’s six-member Monetary Policy Committee (MPC) unanimously voted to keep the repo rate unchanged at 5.50%, after a series of rate cuts earlier in the year, including a surprise 50-basis-point cut in June—the third cut since February.
The decision to pause rate adjustments reflects the central bank’s wait-and-watch approach in light of the evolving global economic landscape, particularly the increasing uncertainty stemming from the U.S.–India trade dispute.
We have factored in global volatility and ongoing trade disruptions. Our policies remain flexible, and we will respond as needed to protect growth and inflation targets,” Malhotra assured.
Tariff Tensions with the U.S.
Malhotra also addressed the growing strain in India-U.S. economic relations, sparked by Trump’s aggressive trade posturing.
The former U.S. President has vowed to “substantially increase” tariffs on Indian imports, escalating them from 10% to 25%, with the possibility of an additional 10% penalty for India’s ongoing purchases of Russian crude oil and military equipment.
The proposed tariff hikes are set to take effect on Thursday, raising concerns across India’s export-driven industries, especially textiles, pharmaceuticals, petrochemicals, and gems & jewellery, which collectively represent a major chunk of India’s $81 billion export basket to the U.S.
Despite these concerns, the RBI governor downplayed the immediate risk to the broader economy: We do not foresee a major impact on India’s economic fundamentals unless there is a reciprocal escalation. We are optimistic that diplomacy will prevail, and an amicable resolution can be reached.”
India’s Economic Strength in a Changing Global Order
The governor also highlighted India’s strategic position in the global economy amid shifting trade alliances and geopolitical upheavals. India’s future lies in resilient self-reliance, and we have already taken decisive, forward-looking measures to support long-term sustainable growth,” he said, referring to structural reforms, improved logistics, digital infrastructure, and industrial incentives under the Make in India and Atmanirbhar Bharat initiatives.
Malhotra noted that India’s diversified export markets, growing foreign direct investment, and focus on innovation and manufacturing are helping mitigate the risks posed by unpredictable global developments, such as rising protectionism and trade wars.
With former U.S. President Donald Trump intensifying his rhetoric against India, the RBI’s firm economic outlook sends a clear signal of confidence in India’s economic fundamentals and global standing.
While the tariff threats pose challenges in the short term, policymakers appear determined to stay the course, relying on strong domestic fundamentals, diversified global partnerships, and a resilient policy framework.
As the global order shifts, India’s role as a stable and growing economic force will be critical, not just for its prosperity, but for global economic balance.
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