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Chief economic adviser V Anantha Nageswaran warns Trump’s tariffs will impact India’s growth in three rounds, affecting consumers, exports, and markets.
Venkatramanan Anantha Nageswaran is an Indian economist and the 18th Chief Economic Advisor to the Government of India.
Trump’s Tariff Impact: Chief economic adviser V Anantha Nageswaran has expressed concerns that US President Donald Trump’s tariffs will affect India’s growth, with the paused reciprocal duties having a “three-round” impact on the country.
On April 2, Trump announced extensive tariffs on goods imported from trading partners, with China bearing the harshest of these duties. Global stock markets, including India’s Sensex and Nifty, suffered significant losses following his “Liberation Day” speech. Trump also imposed a 26 percent tariff on goods from India.
First Round Impact
Nageswaran told The Indian Express that the first round of impact will be on the US consumers and economy, as the US is India’s largest trading partner.
Second Round Impact
The second round involves assessing whether India is faring better than other countries and how its exports to these economies could be affected if American tariffs impact their GDP.
Third Round Impact
The third round of impact involves the financial markets, where the tariffs could influence market sentiment and consumption.
Nageswaran stated that these factors, in various combinations, will affect growth outcomes this year.
Trump Halts New Tariffs For 90-Days
Amid market turmoil and growing fears for the global economy, Trump temporarily paused the tariffs for most countries except China. Later, he lifted tariffs on certain electronic devices, including those made in China. Although markets responded positively to these changes, the uncertainty persists due to Trump’s inconsistent tariff policies.
Nageswaran noted a silver lining in the falling energy prices during these uncertain times. He emphasized that private companies should seize this opportunity to boost growth by leveraging the large domestic market. The government should also formulate policies to reduce the cost of doing business and facilitate easier market operations, which would help mitigate the impact of tariffs.
RBI’s Shift Its Stance From Neutral To Accommodative
On April 9, the Reserve Bank of India (RBI) cut the repo rate by 25 basis points and shifted its stance from “neutral” to “accommodative.” This change suggests potential further rate cuts, depending on inflation trends. Nageswaran remarked that while interest rates can stimulate real estate investments and related household purchases, their role in boosting overall investment spending is limited.
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