CEA Nageswaran warns US tariffs may cut India’s GDP by 0.5%.
He expects real GDP growth of 6.3–6.8% in FY26.
Recent GST reforms projected to boost GDP by up to 0.3%.
India on track to meet 4.4% fiscal deficit target this year.
As India reels under the 50% tariff imposition by U.S., Chief Economic Adviser V Anantha Nageswaran said on Monday that the levies could reduce India’s gross domestic product (GDP) by 0.5 per cent in FY26.
Speaking to Bloomberg TV, he said, "Depending upon how long it lasts even in this financial year, it may translate into a GDP impact of somewhere between 0.5 per cent to 0.6 per cent.”
He further said that he hopes the tariffs are a "short-lived phenomenon". Nageswaran also cautioned that if the tariffs extend into the next financial year, the drag would be greater and pose a “major risk” to India’s growth momentum.
On August 27, the steep duties imposed by US President Donald Trump came into effect. The duties include a 25 per cent secondary tariff and a 25 per cent penalty linked to India’s purchase of Russian crude oil.
However, despite these challenges, Nageswaran stated that India is on course to achieve real GDP growth of 6.3–6.8 per cent in FY26, as per the government's projections. In addition to that, he noted that the economy expanded by 7.8 per cent in the first quarter, the fastest pace in over a year.
Addressing the recent GST reforms, the CEA also projected that it could lift GDP by 0.2–0.3 per cent. He said India remains on track to meet its fiscal deficit target of 4.4 per cent this year, supported by the Reserve Bank of India’s record dividend transfer and asset sales that will help offset revenue shortfalls.
Following Prime Minister Narendra Modi’s announcement, Finance Minister Nirmala Sitharaman led GST Council approved some major GST reforms, cutting four slabs to a simplified two-tier structure of 5 per cent and 18 per cent, alongside a flat 40 per cent rate on ‘sin goods’.
