Trump’s tariff threat
With reference to ‘India braces for Trump’s tariff storm’, we need to see the larger picture, bracketing US and China. Our trade with the US reached $120 billion in fiscal 2024, closely followed by China at $118 billion. While we enjoyed a trade surplus of $35.3 billion with the US, trade deficit with China surged to $85.1 billion. Thus, we may well humour Trump 2.0 with tariff sops.
That said, in the ongoing trade war with US, China’s export prices have already suffered a 60 per cent drop, leaving it little elbow room. The point of significance is, firstly how well can we leverage our exports to US at the cost of China and secondly, benefit from scaled down prices of imports from China.
The US is bound to spawn inflation with high import tariffs and the US Fed will need to sustain high key rates. With our growth indices falling, any move by the RBI for softer rate regime will be pushed back substantially. Hence, Trump’s tariff hike threat will not benefit anyone, will wiser counsel prevail?
R Narayanan
Navi Mumbai
Growth pangs
India’s GDP grew at just 5.4 per cent in the second quarter, down from 6.7 per cent in the first quarter, which is cause for concern. While manufacturing, electricity, and mining had experienced discernible contraction, consumption growth has slowed considerably owing to a moderation in urban spending. Persistent high inflation continues to erode the purchasing power of households. However, with Kharif output having been healthy and the outlook for the rabi crop also looking promising, one can hope for economic momentum to pick up in the second half.
M Jeyaram
Sholavandan (TN)
Gold loan spike
This refers to the news item “Gold loans surge 56% to ₹1.54 lakh cr as focus shifts to secured lending” (December 2). The RBI’s new insistence on banks and NBFCs disbursing more secure loans may be the cause of the runaway increase in gold loans.
However, it also reflects the growing financial distress among people, particularly the middle class, due to dwindling incomes, spiralling household expenditures caused by high inflation, and their inability to manage their finances efficiently. It is not a good indicator of people’s financial well-being if they are increasingly constrained to pledge their life savings in the form of gold jewellery — something they typically do as their last resort.
When the valuable asset disappears, individuals will lack future stability and become susceptible to the cycle of costly debts from private money lenders. The situation must alert policymakers to the underlying causes behind the shooting up of gold loans.
Kamal Laddha
Bengaluru