Can India ride out Trump tariff tempest?

Is India heading for a major economic slowdown? Its performance in the last two years has been outstanding, averaging 7.85% per year. But the tariff antics of US President Donald Trump are creating stormy weather across the globe and in India too. The World Bank has cut its estimate of India’s GDP growth in 2025-26 from 6.7% to 6.3%. However, some recent data show that outcomes could be far worse. It is too early to pass judgment. But alarm bells are ringing.
In recent years, the economy has been highly resilient because of exceptional macroeconomic performance. The current account deficit is close to zero, when most emerging markets are running high deficits. India’s inflation in June was just 2.1%, the lowest since 2019 and far below the RBI target of 4%. The fiscal deficit has been cut for five years in succession to meet the finance minister’s target of 4.45% of GDP.