Impact of Donald Trump’s Tariffs on India’s Economic Growth Projections
India’s growth for fiscal 2025/26 is projected at 6.3%-6.8%, but US tariffs may impact estimates. While tariffs pose risks, discussions on support measures are underway. The diamond industry may suffer, causing job losses, amidst significant market declines.
India is anticipated to maintain its growth target of 6.3%-6.8% for fiscal year 2025/26, mainly if oil prices stay below $70 per barrel. This projection comes despite the downward revision of growth estimates prompted by US tariff announcements, according to a Union finance ministry official.
Economists, including those from Goldman Sachs, have adjusted India’s growth forecasts down by 20-40 basis points to 6.1% for the fiscal year 2025/26. This reduction highlights concerns surrounding the global tariffs instituted by President Donald Trump, which have led to escalated trade tensions and significant market declines within Asia.
Particularly, India’s diamond industry, which largely exports to the US, is projected to be severely affected, threatening numerous jobs in the sector. Officials are currently collaborating with ministries and exporters’ associations to evaluate the potential repercussions of the tariffs.
Furthermore, the finance ministry has received multiple proposals from commerce officials for supporting export industries, including extending interest subsidies, fostering diversification, and boosting bank credit. Nonetheless, one finance ministry official asserted that the tariffs are not expected to severely impact India’s core fiscal metrics for the year.
Additionally, following the news of tariffs, India’s investors experienced a significant loss, with wealth declining by ₹20.16 lakh crore due to a steep drop in market indices, including a 5.22% dip in the Sensex. Despite these tensions, the Indian government has indicated that it does not plan to retaliate against the tariffs but will opt for negotiations instead.
In conclusion, India is projected to achieve a growth rate between 6.3% and 6.8% for the fiscal year 2025/26, provided oil prices remain stable. The imposition of US tariffs, however, has prompted significant revisions in growth estimates and market instability. The government is assessing the situation and seeking ways to support vulnerable sectors, specifically the diamond industry, while avoiding retaliation through diplomatic negotiations.
Original Source: www.hindustantimes.com
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