16 (April)— The US-China trade war has created an opportunity for the central bank to cut interest rates sharply, with concerns that global growth could be hurt. Retail inflation in India has fallen to its lowest level in more than five years as food prices continue to fall. The reason for the decline in inflation is food prices. There has been a sharp change compared to last year. This is said to be the lowest inflation since November 2021.The Reserve Bank of India (RBI) has cut its key policy rate for the second consecutive time, signaling further cuts in the coming months to boost domestic demand. The repo rate was cut by 25 basis points to 6%. The RBI has changed its monetary stance.Inflation was 3.61% in February. Scientists in India had predicted that the inflation rate would come down to 3.60%, but the government has assured that the rate has come down even lower, to 3.34%.This rate has decreased by 2.69% compared to the previous month of March. In March, this rate was 3.75%.India is likely to receive more monsoon rains in 2025. This will boost agricultural and economic growth. Food prices have come down due to better agricultural production. Inflation has also come down due to a more stable supply of vegetables and pulses.With the possibility of a trade war-like situation between the US and China affecting India as well, the RBI took up the challenge and lowered the GDP growth forecast for the fiscal year from 6.7% to 6.5%.The RBI also clarified that uncertainties in global markets, adverse weather conditions, global commodity price increases, supply chain disruptions, and core inflationary pressures could impact inflationary pressures in India.Ms. Soni Jayswal, Asst. Prof., L.D. Sonawane College, Kalyan (Mumbai), stated on this topic that, “In my opinion, the recent drop in India’s retail inflation to 3.34% in March 2025—its lowest in over five years—is a very positive sign for the economy. This decline, especially being below both February’s figure of 3.61% and economists’ expectations of 3.60%, clearly reflects the impact of falling food prices, particularly in vegetables, eggs, and pulses. A strong agricultural output and real-time price monitoring seem to have played a big role here.What’s also notable is that although core inflation rose slightly—due to higher costs of gold, transport, and education—it’s still at historically low levels. This suggests that underlying price pressures are quite manageable for now.This low inflation environment has given the Reserve Bank of India (RBI) some room to act. It recently cut the repo rate by 0.25%, bringing it down to 6%, and shifted to a more “accommodative” stance. That means the RBI is now more focused on supporting growth. It expects GDP growth around 6.5% and inflation around 4%, which shows a fairly optimistic outlook.However, I agree with the RBI’s cautious approach too. Food prices are always sensitive to climate risks, and global uncertainties still linger. So, it’s wise for the RBI to take a “wait and watch” approach before cutting rates further.That said, the current situation does offer some major positives for industry and commerce. Lower inflation and interest rates make it cheaper for businesses to borrow, which encourages them to invest more in production, technology upgrades, and even hiring. Consumers also benefit from stable prices, which boosts spending—and that, in turn, drives demand across sectors like FMCG, autos, electronics, and apparel.Moreover, a low and stable inflation rate makes the overall economic environment more attractive for both domestic and foreign investors. It supports exports by keeping manufacturing costs in check, making Indian goods more competitive in global markets. On top of that, rate cuts often lift investor sentiment and can trigger stock market rallies, especially in rate-sensitive sectors like banking, real estate, and autos.”
Dr. Anupriya Gaikwad
For True to Life News Media Pvt. Ltd.