India's Economy Faces Dual Threat: High US Tariffs & Cheap Chinese Goods Warns Ex-CEA

• Former Chief Economic Advisor Arvind Subramanian warns against interpreting India's 7.4% growth without caution, citing potential overestimation due to a low deflator.
• High US tariffs, potentially increasing due to the Russian oil dispute, and aggressive dumping of cheap Chinese goods (mercantilism) pose significant threats to India's economy.
• Subramanian notes that high-frequency indicators like nominal growth, corporate sales, and consumer spending do not show a strong economic recovery.
• He states that the possibility of a trade deal with the US is now very low, and tariffs could rise further, making the US market difficult for Indian exporters.
• Concerns are raised about India's fiscal position due to GST cuts and the RBI's intervention preventing the rupee from falling, which could otherwise aid exporters.

Why It Matters: India's economy faces significant risks from US tariffs, Chinese dumping, fiscal weakness, and rigid monetary policy.