A cut in time , Pg 10

Key Highlights

Repo Rate Cut & Its Implications

• RBI cut repo rate by 25 bps to 6%, adopting an accommodative stance to stimulate growth.

• Aimed to support exporters amidst global trade tensions, esp. with the US-China tariff war.

Global Trade Tensions

• US raised tariffs on China to 125%; retaliatory tariffs by China reached 84%.

• Echoes historic economic nationalism (e.g., 1930s Smoot-Hawley Act during Great Depression).

Impact on Indian Economy

• Export sectors pressured by tariff uncertainty and weak global demand.

• RBI also lowered Indias GDP forecast to 6.5% due to slow retail inflation and food prices.

Analysis & Way Forward

• India must foster stable governance and economic strength, not protectionism.

• Strategic bilateral deals with the US and other trading partners are essential to buffer global shocks.

Mains Mock Question:

_"How can India balance domestic monetary policy and global trade tensions? Discuss the economic implications of protectionism in the current global scenario."