The Apr’25 volume of the EcoCapsule focuses on reciprocal tariffs announced by Mr. Trump and their possible impact on India and the world. It highlights that a slowdown could be in the offing, even as India stands relatively better placed due to strong domestic growth drivers, low share of exports in GDP, and favourable tariff differential mathematics. Closer home, it hazards that the RBI is likely to cut rates in the upcoming policy as growth pangs cry louder and inflation concerns recede into the horizon. The RBI has carried out gargantuan liquidity operations in recent times, which finally turned banking system liquidity positive in early Apr’25 and have ensured more complete transmission of rates to the yield curve. The Report concludes by saying that while Union G-sec yields are falling, corporate credit spreads could widen.
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