NEW DELHI: Economist and former RBI governor
Raghuram Rajan has said that the steep 50% tariff imposed by the United States on Indian exports was driven less by New Delhi's purchase of Russian oil and more by Trump's reaction to India not giving him credit for mediating a ceasefire with Pakistan in May.
Speaking at the UBS Centre for Economics in Society at the University of Zurich on December 4, Rajan said the "central issue was personalities, especially the personality in the White House," arguing that diplomatic tensions escalated after New Delhi countered Trump's public assertion that he was responsible for ending the four-day conflict in May.
Rajan pointed out that Pakistan publicly thanked Trump for his role, while India took the position that the ceasefire resulted from direct communication between the two sides, without US intervention. "Pakistan played it the right way and said it was all because of Mr. Trump," he said. "India tried to argue the countries had reached an agreement without Mr. Trump. The truth is probably somewhere in between."
According to Rajan, the differing narratives had a tangible outcome: "The net effect was India got 50% tariffs, Pakistan got 19%."
Rajan was referring to India-Pakistan conflict that happened earlier this year in May after India launched Operation Sindoor against terror targets in Pakistan and Pakistan-occupied Kashmir following the killing of civilians in Pahalgam.
Responding to a question on whether reducing Russian oil imports would help strengthen ties with Washington, Rajan dismissed oil as the primary factor. “I don’t think Russian oil purchases were ever the central issue,” he said, noting that Trump had recently waived oil purchases by Hungary, led by Viktor Orban.
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