GDP Growth Forecast: Reserve Bank of India (RBI) Governor Sanjay Malhotra has announced the reduction in repo rate on Friday, December 5. The Monetary Policy Committee (MPC) has decided to reduce the repo rate by 25 basis points to 5.25 percent. He also estimated that the GDP growth for the current financial year 2026 will be 7.3 percent. GDP growth has been increased from 6.8 percent to 7.3 percent. The inflation estimate for the third quarter of the financial year 2025-26 has been increased from 6.4 percent to 7 percent and for the fourth quarter from 6.2 percent to 6.5 percent.

RBI Governor gave information

RBI Governor informed that the domestic economic activities of the country are going on at a good pace. Demand in rural areas remains strong, while demand in cities is gradually improving. In the matter of repo rate, the Monetary Policy Committee has unanimously decided to cut interest rates. Under this, a reduction of 25 basis points has been made. Giving further information, Sanjay Malhotra said that before taking the decision of rate cut, MPC studied the changing macro economic situation and future possibilities in detail and on this basis all the members have taken the decision of rate cut.

Mentioned about GST reform and strong consumption

According to the RBI Governor, the country’s second quarter GDP growth accelerated due to strong consumption and reforms in GST. He said that retail inflation has come down to 0.25 percent in October 2025, which is the lowest level till date.

There was no change in the repo rate in the last monetary policy meeting on October 1. The committee had taken the decision to keep the repo rate stable at 5.5 percent.

How much did the repo rate decrease this year?

RBI had reduced the repo rate by a total of 100 basis points between February and June this year. That means interest rates were reduced from 6.5 percent to 5.5 percent. After this, no changes were made in the policy meetings of August and October and it was decided to keep the repo rate stable.

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India-asa news: US President Donald Trump has announced a tariff on India. On April 2, how much this tariff will be will be, everyone’s eyes are on from Dalal Street to Mint Street, from boardroom to policy corridors. Trump has said many times before that India imposes the most tariffs compared to other countries, so America will also impose tariffs on India in the same proportion.

According to data from the World Trade Organization (WTO), India’s average tariff in 2023-24 was 12 percent, while the US had only 2.2 percent. In an interview to Breetbart News on March 19, Trump said, “I believe that India is going to cut its tariff soon, but from April 2 we will put as much tariff on them as they put on us.” Now the question arises that how much will this decision affect India? Let us know what effect it will have:

Learn what S&P Global’s report says

In the new report, S&P Global has said that India’s strong economy and low dependence on America can save it from the effects of Trump tariff. According to the report, the share of exports in India’s GDP is only 10 percent, which will limit the direct impact of tariffs.

Trump again reiterated the policy of ‘reciperook tariff’

However, it can definitely be seen on some sectors. The report of S&P states that India’s less business connectivity with the US reduces the risk risk, but can affect steel and chemical sectors. The rating agency also said that most of the Indian companies obtained by rating are capable of facing temporarily income loss.

Fittch: India protected from some extent tariff effect

Fittch has predicted India’s GDP growth rate of 6.5 percent in FY 2025-26. However, the agency has warned that if the American trade policies become more strict than expected, it can become a big risk for India’s economic growth.

According to FITCH, India’s business confidence remains strong, and according to the bank loan survey, the loan to the private sector is increasing by double digits. The agency believes that India’s economy is somewhat safe from the impact of American tariff policies due to low depending on external demand.

Moody’s: Steel, Auto and Chemical Sector most affected

According to the Moody’s Rating reports, the automotive, steel, chemicals and business areas of South and South-East Asia can become the biggest victims of the American tariffs. This may reduce the demand for these industries and increase the cost.

However, Moody’s said that mining, oil and gas, shipping, investment holding companies and agricultural and protein sectors are the most capable of tolerating this effect.

Negative impact on Indian growth rate

According to Goldman Sachs, the tariff of Trump may get a shock of 10 to 60 basis points (BPS). The report said that India’s gross export to the US is only 2% of GDP, which is the lowest in the emerging markets. However, if the US implements global tariffs to all countries, then the impact of India’s domestic economic activity on the final demand of America can be doubled. This can affect the Indian GDP growth rate from 0.1% to 0.6%.

America can impose tariffs on India in three ways:

• Applying tariffs based on average tariff difference on all products imported from India.
• Profits equal to India’s tariff on every product.
• Applying non-tariff measures, such as administrative obstacles, import license conditions, etc.

Goldman Sachs believes that any of these ways can affect India’s economy, but India’s trading relations with America being comparatively limited may be less than in other countries.