Despite the reciprocal tariffs and penal tariff (imposed by the US), and after seeing the resilience of Q1 growth, we are retaining the growth rate projections for the current financial year at 6.3-6.8 per cent – V Anantha Nageswaran, CEA

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The 50 per cent US tariff on Indian goods pose a downside risk to growth but the impact is expected to be short-lived for the economy, and consumption demand could see an uptick after the new goods and service tax (GST) rates are implemented which could even offset the external uncertainty, Chief Economic Advisor (CEA) V Anantha Nageswaran reckoned .

“There are implications for capital formation due to uncertainty, but we expect it to be short-lived.

“Industry has planned its strategy to absorb a portion of those tariffs, distribute those costs, and diversify in other markets,” Nageswaran said during a virtual press briefing on the first quarter gross domestic product (GDP) growth numbers.

Nageswaran exuded confidence that the Indian economy will grow at a rate between 6.3 and 6.8 per cent in the current financial year on strong domestic demand, even though there would be some downside risks to the projections due to the 50 per cent US tariffs.

“Despite the reciprocal tariffs and penal tariff (imposed by the US), and after seeing the resilience of Q1 growth, we are retaining the growth rate projections for the current financial year at 6.3-6.8 per cent,” Nageswaran said.

The CEA said that while it was difficult to calculate the precise impact of the US tariff on the growth at this point, the removal of
ncertainty can unleash higher growth in the coming quarters.

“Aggregate demand growth should hold up in the economy,” Nageswaran said.

He said that any hold-up in discretionary demand due to the revision of GST rates would be resolved by September, after the GST council meeting.

“We still have a good window before festival season kicks in.

“The month of September will see a pick-up in consumption,” the CEA said.