US Tariff Cut May Lift India’s Economic Growth To 7.4%, Above Survey Projections: CEA

New Delhi, Feb 4 (KNN) India’s economy could grow faster than earlier projected after the United States sharply reduced tariffs on Indian goods, Chief Economic Adviser V. Anantha Nageswaran said on Tuesday. 

He indicated that growth could be close to 7.4 per cent, compared with the 6.8–7.2 per cent range projected in the Economic Survey released last week.

Speaking in an interview with Bloomberg Television, Nageswaran said the revised assessment followed the tariff announcement made late on Monday and would require further analysis.

Impact on Growth and Investment

The reduction of US tariffs to 18 per cent is expected to ease pressure on India’s exports and investment at a time of weak global demand.

The move could also make India more attractive to global firms seeking to diversify supply chains away from China, supporting the government’s long-term growth strategy and its goal of becoming a developed economy by 2047.

On concerns that stopping discounted Russian oil imports could raise energy costs, Nageswaran said crude prices in the range of USD 60–70 a barrel have not historically posed problems for the Indian economy. He declined to comment on how India might scale up purchases from the US.

Markets and Economists React

Indian markets responded positively to the development, with the rupee recording its biggest gain in over three years and stock indices rising sharply on Tuesday. Economists are also beginning to revise their forecasts.

Sakshi Gupta, economist, HDFC Bank, said, “The tariffs were a drag on our growth forecast of 6.9 per cent for the next fiscal. Now that it is gone, our forecast may go up by 20 to 30 basis points under the current series.”

(KNN Bureau)