GROWTH FACES HEADWINDS

Geopolitical turmoil, American tariffs and a discouraging employment scenario dampen enthusiasm for the narrative of rapid economic growth

- M.G. ARUN

As the global economy grapples with its severest crisis since the pandemic, India has caught a particularly biting strain of the flu.

Geopolitical tumult—Russia’s grinding war in Ukraine, Israel’s bombardment of Gaza and now Donald Trump’s killer tariffs—has disrupted global trade and dented investor confidence. That third factor hits directly at India’s momentum. We hold on to our crown as the world’s fastest-growing major economy, but growth remains stuck in second gear: GDP grew a middling 6.5 per cent in the fiscal year ending March 2025, and the prognosis does not seem too good for this year either.

Little wonder, then, that public confidence in the Modi government’s economic stewardship is beginning to waver. According to the latest INDIA TODAY Mood of the Nation (MOTN) poll, the share of respondents rating the government's handling of the economy as ‘outstanding’ or ‘good’ has slipped by 4.5 percentage points since February—to 47.8 per cent from 52.3 per cent. This is the lowest since August 2023, when only 46.6 per cent held that view. In tandem, the ranks of those who deem the government's performance ‘average’ or ‘poor/ very poor’ have swelled by 1.7 and 1.8 percentage points, respectively. As economic headwinds gather, so too do questions about the government’s ability to steer through them.

Optimism about an imminent economic revival appears to be losing steam. Just 33.1 per cent of respondents in the latest MOTN poll believe the economy will improve over the next six months—a marginal decline from the previous survey, and the lowest since August 2023. Yet amid the gloom, there is a sliver of reassurance: the proportion of those expecting conditions to stagnate or worsen has edged down to 55 per cent, from 56.9 per cent in February.