Mumbai, Apr 9 (UNI) Global trade and policy uncertainties may impede growth but India need not be unduly worried for its impact on domestic inflation, says RBI, while projecting the economic growth or GDP growth for 2025-26 at 6.5 per cent.

“Overall, while global trade and policy uncertainties shall impede growth, its impact on domestic inflation, while requiring us to be vigilant, is not expected to be of high concern,” Sanjay Malhotra, Governor, Reserve Bank of India (RBI), said while announcing the bi-monthly monetary policy of the current financial year 2025-26.

Taking all factors into consideration, real GDP growth for 2025-26 is now projected at 6.5 per cent, with Q1 at 6.5 per cent; Q2 at 6.7 per cent; Q3 at 6.6 per cent; and Q4 at 6.3 per cent.

While the risks are evenly balanced around these baseline projections, uncertainties remain high in the wake of the recent spike in global volatility. It may be noted that the growth projection for the current year has been marked down by 20 basis points relative to our earlier assessment of 6.7 per cent in the February policy. This downward revision essentially reflects the impact of global trade and policy uncertainties, Malhotra said

The RBI reduced the key lending rate by 25 basis points from 6.25 per cent to 6 per cent, a decision that may ease pressure on monthly instalments (EMIs) of those who have taken loans for buying home or automobile.

Malhotra observed that the risks to inflation are two sided. On the upside, uncertainties may lead to possible currency pressures and imported inflation. On the downside, slowdown in global growth could entail further softening in commodity and crude oil prices, putting downward pressure on inflation.

On the possible implications of the recent global trade and related policy uncertainties, he said, first and foremost, uncertainty in itself dampens growth by affecting investment and spending decisions of businesses and households. Second, the dent on global growth due to trade frictions will impede domestic growth. Third, higher tariffs shall have a negative impact on net exports.

“There are, however, several known unknowns - the impact of relative tariffs, the elasticities of our export and import demand; and the policy measures adopted by the Government including the proposed Foreign Trade Agreement with the USA, to name a few. These make the quantification of the adverse impact difficult,” he added.

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