Impact of 50% US tariff would be concentrated in Q2: CEA

The 50 per cent US tariff on Indian goods poses a downside risk to growth, but the impact is expected to be short-lived for the economy, and consumption demand could see an uptick after the new goods and service tax (GST) rates are implemented, which could even offset the external uncertainty.

- Ruchika Chitravanshi

Chief Economic Advisor (CEA) V Anantha Nageswaran reckoned on Friday.

"There are implications for capital formation due to uncertainty, but we expect it to be short-lived. Industry has planned its strategy to absorb a portion of those tariffs, distribute those costs, and diversify in other markets," Nageswaran said during a virtual press briefing on the first-quarter gross domestic product (GDP) growth numbers.

Nageswaran exuded confidence that the Indian economy will grow at a rate between 6.3 and 6.8 per cent in the current financial year on strong domestic demand, even though there would be some downside risks to the projections due to the 50 per cent US tariffs.