Opinion Analysis News

Money9 Financial Freedom Summit 2025: ‘The Macro Picture’, global fears from Trump’s tariffs ensue but India’s aspirations must continue

New Delhi: The third edition of the Money9 Financial Freedom Summit is currently being held in Mumbai and was inaugurated by Maharashtra Chief Minister Devendra Fadnavis. The Summit saw a number of panel discussions on a variety of aspects related to global economy, finances and the markets. One of them, moderated by R Sridharan, TV9 Network Editor-International, saw a spirited discussion on ‘The Macro Picture: Promise or Perils?’. The sessions included Shubhada Rao, Founder Quant Eco Research, Rajani Sinha, Economist and Indranil Pan, Chief Economist, Yes Bank.

Tariff wars

The conversation started by addressing something that has been pervasive in the world of finance and economics ever since the return of Donald Trump as the President of the United States after his re-election. It concerns Trump announcement of his plans to impose reciprocal tariffs on several countries, which might also include India, something on which Shubhada Rao, Founder Quant Eco Research, said, “On a relative scale, India is better placed,” further adding, “our export to GDP ratio, our dependence on exports for growth is relatively lower.”

How tariffs might halt global economic growth and how it might jack up inflation, has been a major worry since Trump’s announcement. When this question was raised by R Sridharan, TV9 Network Editor-International, Economist Rajani Sinha, first agreed to Shubhada’s assessment of how the tariffs might not be that hurtful to India as it might be to others. But talking of a global trade and growth slowdown she said that, “Overall if global trade slows down which is going to happen and global growth slows down that will definitely have a severe impact on India. Right now our manufacturing sector is dealing with this dumping of goods from China because of excess capacity there. Then we could see even more of that happening. That is something the economy will have to deal with.”

On the other hand, she also talked about how there might be some chances for opportunity here. “In this situation when we can’t do away with what the US is going to do, the best thing which is in our control is to see how we can tap into those opportunities. One thing is that, some of the economies like Canada, Mexico and China, they are going to get relatively more impacted by this. So India should see as to how they can take up some of those opportunities.”

Future growth story, worries and hopes

Talking of fears of a probable drop in revenue collections, Indranil Pan, Chief Economist, Yes Bank, tried to placate those, “I’m not really worried too much, in the sense that a significant buffer to the whole revenue generation model has been the RBI dividends.” His worries, he rather said, “is that the government possibly is reaching a limit in terms of how much of capEX they can do.”

Another worry that Pan pointed out was, the “inflationary perspective of the tariffs rather than the growth perspective of the tariffs.” “We are still more a inward growth oriented economy and if the whole supply chain across the world gets fractured and that in turn leads to higher costs for manufacturing and therefore higher inflation. We have had lots of trouble getting our inflation down. So, that indirectly will have its impact in terms of lower consumption behaviour.”

Talking about probable ways to deal with chances of inflation, like rate-cuts, Rajani Sinha commented, “I’m not overly worried about inflation at this point in time. There are inflationary concerns because of tariffs but the comforting factor at this point in time is that, for India inflation was mainly coming from food. It was mainly food inflation and that too specifically vegetable price inflation.” As this looks to subside, inflation seems to not be the biggest concern at this. 

Another key point discussed was a raging question, lack of wage hikes and its relation to skill levels. But as technology is looking to potentially usher in an era of joblessness growth, the scenario becomes even more tricky. The question, agreeably a tough one to answer for India, was taken up by Indranil Pan. He explained how, “That is where India is stuck, between today and 2047. I believe that we are in this middle-income trap and peer-rated countries have per-capita income much much higher than the 2,700 dollars per-capita income that we have.”

Expanding the conversation, he then talked about some of the reasons for the per-capita income not growing as we would like to see, “The critical issue also is how we start looking at self-sufficiency in food and food security because of the challenges we are facing in terms of capital. A lot more money needs to go into the agriculture sector.” 

Coming back to the fears around tariff wars and their effects on global economy and India’s aspirations, the panel concluded, with Shubhada Rao first commending India’s negotiating skills and how it might come to use, especially with the US and how this might be the best time for India to “unleash all kinds of reforms.” To this, Rajani then added, how focus should be on “ensuring our domestic situation is in a good shape” as we are a consumption dependent economy. It is important “to focus on household income in terms of wage growth as well as creating more employment opportunities” and to make use of our huge demographic dividend. Skill our manpower appropriately so that they are productively employed and “ensure that our domestic demand is strong in the midst of whatever is happening globally.”