The week in charts: RBI cuts growth forecast, unemployment rises, tariffs paused

RBI cuts growth projections

The RBI has cut its GDP growth projection for the current financial year by 20 basis points to 6.5% amid escalating global trade tensions and the imposition of tariffs by the US. Growth forecasts were cut for three of the four quarters. 

While cutting the policy repo rate by 25 basis points, the RBI noted that while domestic factors such as sustained demand from rural areas and an anticipated revival in urban consumption were expected to support growth, merchandise exports would be weighed down by the evolving global economic landscape.

Also read | RBI has done its bit: Fiscal and trade policy moves must do the rest

Rising unemployment

India’s unemployment rate for those aged 15 and above rose slightly to 3.2% in 2024 from 3% in the previous year, according to the latest Periodic Labour Force Survey (PLFS). Rural unemployment edged up to 2.5% from 2.4%, while urban areas saw a slight improvement with the unemployment rate falling from 5.2% to 5%. However, unemployment in urban areas was much higher than in rural areas. Notably, women’s participation in the workforce declined to 40.3% from 41.3% in 2023.

Trump’s tariff tease

90 days: That’s the duration of the temporary pause on reciprocal tariffs announced by US President Donald for all nations except China. Instead, a 10% baseline tariff will apply. China, which had retaliated against the US, will now face a steeper 125% tariff, signalling a full-blown trade war between the world’s largest and the second-largest countries. 

Also read | Mint Primer: What Trump’s tariff tantrums mean for investors

Nevertheless, the temporary relief triggered a market rally, causing the S&P 500 to surge more than 10% and the Nasdaq more than 12% on Wednesday. However, China soon retaliated further with an 84% tariff on US goods.

AI startups emerging

Commerce minister Piyush Goyal’s recent comments have sparked a debate on innovation in India’s startup ecosystem. His concerns are not entirely misplaced, as many startups focus on the consumer and retail space. A Mint analysis of government-recognised startups shows that IT services, healthcare and food industries dominate. 

Also read: The real innovation laggard is India Inc, not startups

However, artificial intelligence (AI) startups are also emerging, making up about 1.5% of the total. While India has the third-highest number of unicorns in the world, it lags behind the US, China and several other countries on AI and deep tech.

BYD’s power drive

Chinese electric vehicle (EV) giant BYD has quickly risen to prominence, surpassing Tesla in both revenue and sales volume. In 2024, BYD reported an impressive $107 billion in revenue, outpacing Tesla’s $97.7 billion. This shift marks a significant turning point in the EV industry, with BYD expected to surpass Tesla in global market share by 2025, an analysis by howindialives.com shows. 

The company’s growth is driven by its tech leadership, vertically integrated production model, and cheaper assembly of its vehicles compared to Western models.

Also read: Mint Quick Edit | BYD versus Tesla: Let merit decide pole position

Tata Steel’s Dutch job cuts 

1,600: That’s the number of jobs Tata Steel Netherlands will cut to save costs. This is nearly a fifth of the 9,000 workforce at the IJmuiden steel factory. The company is taking several measures to save over €500 million (about ₹4,800 crore) in costs in FY26, Mint reported. This comes against the backdrop of a transition towards cleaner steelmaking with the financial aid from the Dutch government. The company is looking to shut one of its two coal-based blast furnaces at IJmuiden by 2030.

Changing patterns of remittances

India remained the world’s largest recipient of remittances in 2023, receiving $119.5 billion from its international migrants. However, the patterns of remittances are shifting. According to the Reserve Bank of India (RBI), the share of remittances from advanced economies has increased, surpassing that from Gulf countries. 

In 2023-24, the US, UK, Singapore, Canada, and Australia together accounted for 52% of India’s remittances, while six Gulf countries, hosting 45% of Indian migrants, contributed only 38%. This reflects migrants’ shift towards skilled work in higher-income nations.

Also read | Brain gain: Skilled Indians are fuelling India’s remittance surge

Chart of the week: Fuel trend

The union government has increased the excise duty on petrol and diesel by ₹2 per litre. However, retail prices won’t change, thanks to a decline in crude oil prices. While petrol and diesel prices have not deviated much from crude oil trends in recent years, the latest move may open up a gap.

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