‘India’s economic slowdown is self-inflicted, we can grow at 6.5-7% if…’: Economist Neelkanth Mishra 

Neelkanth Mishra, Chief Economist at Axis Bank and Head of Research at Axis Capital, has attributed India’s current economic slowdown to domestic factors rather than external influences. “The impact of Trump’s policies on our economy is marginal. When we wrote the 2025 outlook, Trump had already won the election. So, we stated that while there would be global turbulence, the key drivers would remain local. The slight slowdown in our economy right now — the fact that our speed has reduced — is entirely self-inflicted and self-driven. The sooner we recover from it, the faster the economy will grow. If we can effectively manage our financial conditions, liquidity conditions, real estate cycle, and power generation cycle, we can comfortably grow at 6.5-7%,” Mishra said in a podcast with G2G.

On US President Donald Trump’s tariff war, Mishra noted the deep uncertainty it has created across global markets. “The biggest uncertainty is that no one knows what will happen next. Suppose you are an industrialist, whether in India, Indonesia, China, Vietnam, the US, or Europe. If it’s not critical for you to decide immediately where to set up a factory today, you would likely choose to wait. This uncertainty itself slows down growth. By creating uncertainty, growth has naturally slowed.”

He further explained how physical wars sometimes provide economic benefits, especially when they do not occur on home soil. “If you look at the First and Second World Wars, the US stock market saw a major surge. But in a trade war, you enter it knowingly, accepting that your own economy will take a hit. Trade wars are damaging to the global economy as a whole. Their negative effects will start becoming visible soon. So far, only announcements have been made, but soon, we will see retaliatory actions.”

Mishra added that retaliation in trade wars often extends beyond economic concerns. “Countries will retaliate not just for economic reasons but also due to political pressure from their domestic constituencies. Whether it’s China, India, or Indonesia, leaders will have to showcase their strength to their supporters. This situation could persist for a few years. If someone claims that India will greatly benefit from this, that might be possible in rare cases, but overall, trade wars are damaging for everyone.”

The economist said that if India, to avoid reciprocal tariffs, reduces its import tariffs there will be disruptions in the short term but it will be beneficial in the medium term. “Even if we make these changes because of Trump, from an economic perspective, it will be beneficial in the medium term. There will be disruptions in the near term, but I will return to my first point: if we look at the next 12 to 24 months, the levers of growth are primarily in our hands.”

India’s economy grew at 6.2 per cent in the third quarter (Q3) of financial year 2024-25 (FY25). While this was higher that the previous quarter when the GDP growth fell to a seven-quarter low of 5.4 per cent in Q2FY25, economists belive that the Indian economy should grow at 7-plus rate given its size.