Factor in uncertainty as a permanent feature

The financial year 2026 has begun against the backdrop of intensifying global uncertainties.

- MAHESH PATIL

The Trump tariffs have signaled a shift towards a more protectionist global trade environment.

While there is a 90-day pause on tariffs for countries willing to negotiate, the trade war with China continues with a 125 percent tariff, further deepening the economic rift between the US and China. This also means US growth slows down significantly, which increases the probability of a recession.

Amid the global noise, India may well emerge as a relatively safe harbor and possibly a beneficiary in the long term as global supply chains readjust.

India's goods exports and trade surplus with the US at 2.3 percent and 1.2 percent of GDP (gross domestic product) are significantly lower in comparison to most emerging market (EM) counterparts like Vietnam, China, and South Korea.

EMs like India, where inflation is not a problem, will resort to monetary stimulus to support domestic growth since the fiscal room is limited.

The RBI (Reserve Bank of India), in its latest policy meeting, has reaffirmed its intent to maintain ample liquidity throughout the year and has set us up for another 50bps (basis points) rate cut this year.