Speedily resolve the fallout of US tariff war: RBI ex-guv Rangarajan

Chennai: Former RBI governor C Rangarajan has emphasized the need for a quick resolution to the US imposing a 50% tariff on exports from India. "It has something to do with the weaponization of tariffs or geopolitical considerations. So, in this situation, I would say that we really need to shift our attention towards a quick resolution of our problems with the US, because it is not a purely economic consideration that is driving what is happening there," he said in his address at the Madras Institute of Development Studies (MIDS) Founder's Day lecture on ‘Evolving contours of India's monetary policy' here on Thursday.

Noting that India is among the few countries facing a high tariff level of 50%, he said each country is attempting to get the better of the other and come to an understanding. "I hear now and then that the pact between India and the US is nearing completion, but we just don't see it. It's always a matter of give and take, and what to give and what to take is the issue," he said.


He was referring to the US tariff war in the context of the exchange rate, which recently fell against the US dollar to 91. "What is happening now is capital outflows. Many institutional investors abroad are selling shares in India and repatriating the money," he said. On inflation, Rangarajan said it is important that the monetary authority has a special responsibility to monitor, assess, and take appropriate action to control inflation. "I would say flexible inflation targeting is a good balance between the twin objectives of growth and price stability. It takes care of the need to control inflation beyond a particular level, and it ensures that growth is not affected," he added.