RBI Governor Sanjay Malhotra Counters Trump’s ‘Dead Economy’ Remark, Says India Outpacing US in Global Growth Contribution

Reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday pushed back against US President Donald Trump’s controversial claim that India is a “dead economy,” asserting that India is contributing more to global growth than the United States.

“We are contributing about 18% to global growth, which is more than the US, whose contribution is expected to be around 11%,” Malhotra said at a press briefing in New Delhi, according to PTI.
“We are doing very well and we will continue to improve further.”

India’s Economic Outlook Remains Strong

Malhotra highlighted that India is projected to grow at 6.5% in 2025, against the IMF’s global growth forecast of around 3%, and noted the country’s strong historical performance — averaging 7.8% annual growth in recent years.

Despite mounting global uncertainties, including rising trade tensions with the US, Malhotra expressed confidence in India’s economic resilience, supported by robust domestic demand, an above-average monsoon forecast, and signs of rural recovery.

RBI Holds Repo Rate at 5.50%

In its latest policy review, the RBI’s Monetary Policy Committee (MPC) voted unanimously to keep the repo rate unchanged at 5.50%, following a surprise 50-basis-point rate cut in June — the third since February. The decision reflects a cautious approach amid Trump’s tariff threats and evolving global trade dynamics.

Trade Tensions with the US Escalate

Addressing the potential fallout from Trump’s escalating rhetoric on trade, Malhotra downplayed concerns over immediate economic damage:

“We don’t see a major impact of US tariffs on the Indian economy unless there is a retaliatory measure,” he said. “We are hopeful of reaching an amicable solution.”

Trump recently announced plans to double tariffs on Indian goods from 25% to 50%, and warned of further penalties over India’s continued imports of Russian oil and military equipment. These moves have drawn criticism from Indian political and business circles, especially after Trump labeled India a “dead economy” last week.

Markets React: Rate-Sensitive Stocks Decline

Following the RBI’s decision to hold rates, interest rate-sensitive sectors took a hit on the Bombay Stock Exchange (BSE).

• Bosch fell 4.85% to ₹38,617.75

• Hyundai Motor India dropped 1.95% to ₹2,146.15

• Hero MotoCorp declined 1.31% to ₹4,482.60

• Apollo Tyres dipped 1.07% to ₹435.10

• Mahindra & Mahindra slipped 0.83% to ₹3,183.50

The market reaction reflects investor caution amid a volatile global trade environment and uncertainty over India-US relations.

Looking Ahead

Despite external pressures, Governor Malhotra struck an optimistic tone, emphasizing that India’s fundamentals remain strong:

“Global trade challenges remain, but the Indian economy holds bright prospects in the changing world order. We’ve taken decisive and forward-looking measures to support growth.”