Tariff war: As Trump pressures India to cut Russian oil — will inflation rise if crude stops? RBI governor Sanjay Malhotra explains
NEW DELHI: As global tensions over energy trade deepen, Reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday downplayed fears that a sudden halt or sharp reduction in India’s Russian crude oil purchases would significantly impact inflation. Speaking after the central bank’s monetary policy briefing, Malhotra responded to a direct question about the potential inflationary consequences of a shift away from Russian oil, amid threats of increased US tariffs.“Crude is an important element in determining our inflation,” he acknowledged. “But at the same time, let’s keep two things in mind. It’s not only Russian oil that we are taking — we are taking oil from other countries. If the mix changes, what is its impact on prices? What are the global commodity prices of crude? It will depend on all that.”“We don’t see any major impact as of now on inflation because I think the government will take an appropriate decision on the fiscal side in case there is any shock over there,” he said.His remarks come amid India’s growing trade friction with Washington. President Donald Trump has threatened to “very substantially” raise tariffs on Indian goods over New Delhi’s continued imports of discounted Russian oil, accusing India of profiting from the Ukraine war. The US State Department has said Trump will decide how to deal with “nations that are facilitating this war”.India, in turn, has sharply rejected these accusations. The ministry of external affairs called the targeting of India “unjustified and unreasonable”, noting that both the US and EU continue their own trade with Russia in areas ranging from uranium and fertilisers to chemicals and machinery.Despite the geopolitical backdrop, the RBI held its repo rate steady at 5.5 per cent, following 100 basis points of rate cuts over three meetings this year. Inflation forecasts were revised downward to 3.1 per cent for the fiscal year, while the GDP growth projection remains unchanged at 6.5 per cent.Malhotra reiterated that the central bank would remain agile and proactive, monitoring global and domestic developments. “Despite a challenging external environment, the Indian economy is navigating a steady growth path with price stability,” he said.
