High US tariffs pose risk to India's growth: Crisil
What's the story
The high tariffs imposed by the US on Indian goods could be a major risk to India's growth, according to a recent report by Crisil Intelligence. The September report highlights that these tariffs will affect both Indian exports and investments. However, it also notes that domestic consumption is likely to drive growth, owing to low inflation and rate cuts.
Economic indicators
GDP growth and inflation projections
India's GDP growth hit a five-quarter high of 7.8% in Q1 of FY25-26, up from 7.4% in the same quarter last year. However, nominal GDP growth slowed to 8.8% from 10.8% during the same period last year, Crisil Intelligence said. The report also predicts that consumer price index (CPI) inflation will ease to 3.5% this fiscal year from last year's 4.6%.
Inflation control
Factors influencing inflation rates
The report predicts that robust agricultural growth will help keep food inflation in check, although the impact of excess rainfall is yet to be fully evaluated. Further, it expects lower crude oil prices and stable global commodity prices to contain non-food inflation. These factors are expected to play a crucial role in controlling India's inflation rates in the coming months.
Policy outlook
RBI likely to implement one more rate cut
On the monetary policy front, Crisil Intelligence predicts that the Reserve Bank of India (RBI) will implement one more rate cut this fiscal year, followed by a pause. The central bank's monetary policy committee had cut the repo rate by 100 basis points between February and June 2025. It is now waiting for the full transmission of these past cuts before making any further decisions on interest rates.