India expected to maintain robust growth despite Pakistan tensions, trade woes
India is poised to remain the world's fastest-growing major economy this year, analysts have said, with a recent jumbo rate cut by its central bank expected to boost consumption and investment, even as the country contends with fresh military tensions with Pakistan and an uncertain global trade environment.
The Reserve Bank of India (RBI) last week delivered a larger-than-expected interest rate cut of 50 basis points and reduced the cash reserve ratio – the minimum amount of capital banks must park with the central bank – by one percentage point. The move is projected to inject about US$29.15 billion into the banking system by year-end.
The surprise monetary easing followed robust economic performance, with gross domestic product expanding 7.4 per cent in the January to March quarter – an acceleration that helped prompt the RBI's pre-emptive push to sustain growth.
'It looks unlikely that India will be able to maintain the 7.4 per cent growth, but it should be able to record a growth of 6.5–7 per cent in this financial year [ending March 2026],' Sujan Hajra, chief economist and executive director at the Anand Rathi group, told This Week in Asia.
A man walks past the rupee symbol outside the Reserve Bank of India headquarters in Mumbai on June 6. The central bank last week delivered a larger-than-expected interest rate cut of 50 basis points. Photo: AP
India is set to overtake Japan as the world's fourth-largest economy by the end of this calendar year, according to projections by the International Monetary Fund. The impact of India's tensions with Pakistan and volatile global environment was likely to be offset by the central bank's monetary easing, Hajra said.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
South China Morning Post
7 hours ago
- South China Morning Post
Hong Kong's John Lee seeks closer ties in meeting with EU officials
Hong Kong's leader has sought to deepen ties with the EU in a meeting with the bloc's representatives, saying the city will remain a free port despite growing protectionism globally. Chief Executive John Lee Ka-chiu said on Wednesday that he had hosted a lunch attended by Harvey Rouse, head of the Office of the European Union to Hong Kong and Macau, as well as 15 consuls general from the bloc's member countries. The gathering served as a platform for direct dialogue and an exchange of views, with a focus on exploring new avenues to enhance economic, trade and development cooperation, Lee said in a social media post. He emphasised Hong Kong's unique position as a 'superconnector' and 'super value-adder', citing its low and simple tax regime, world-class infrastructure, diverse and multicultural talent pool, and broad spectrum of professional services. These attributes made the city an 'ideal gateway between East and West', Lee said. He also extended an invitation to businesses globally, including those from Europe, to 'explore the vast array of opportunities' both in Hong Kong and mainland China. The lunch took place amid simmering US-China tensions, even as the two countries reached a deal during high-level talks in London on tariff cuts, rare earth exports, Chinese students attending US universities and a trade-war truce signed earlier in Geneva. The latest agreement is subject to final approval by the presidents of the two countries. The United States and China have been engaged in an escalating tit-for-tat tariff war in recent months, with the levy on Chinese goods at one point reaching 145 per cent.
South China Morning Post
8 hours ago
- South China Morning Post
Trump says China, US agree to ‘done deal', Beijing's C919 ambitions: SCMP daily highlights
Catch up on some of SCMP's biggest China stories of the day. If you would like to see more of our reporting, please consider subscribing China and the US have agreed to 'a done deal' that includes rare earth exports from China and Chinese students attending colleges in the US, President Donald Trump said on Wednesday, pointing to a potential breakthrough aimed at cooling trade tensions that had been reignited by mutual accusations of deal violations. China will push for civil aviation to be a topic of discussion at a summit with European Union leaders in July, with particular focus on the certification of the domestically produced C919 aircraft, according to a source with knowledge of the matter.
South China Morning Post
8 hours ago
- South China Morning Post
Hong Kong lawmakers back criminalising of subletting public rental flats
Hong Kong lawmakers have approved the government's proposal to criminalise the subletting of public rental flats or the use of such properties for business purposes, with the offence to carry a maximum penalty of one year in prison and a HK$500,000 (US$63,700) fine. Advertisement Lawmakers on Wednesday voted on the Housing (Amendment) Bill, which introduces new offences under the Housing Ordinance to combat serious abuse of public flats. Secretary for Housing Winnie Ho Wing-yin stressed that the amended law would not cover normal interactions with neighbours, such as tutoring, and tenants working from home. 'As long as you are not using the flat for delivering and storing goods, and strangers are not coming in and out frequently for payment and collection, new working models, such as working from home and dealing with matters online, are not considered serious abuse,' she said at the Legislative Council meeting. 'The amendment is to combat those who are no longer living in the public rental flat but are using the property for profit-making.' Advertisement Ho added that the government would step up the promotion of the policy and strengthen training for officers enforcing it before the law took effect on March 31 next year.
