Trump's Impact On India Uncertain, But Defence Jobs May See Boost: Raghuram Rajan

Discussing the Indian economy, Rajan expressed concern over the heavy reliance on government spending while private investment remains weak

"Trump administration is anti-globalisation, so there is a source of worry for India because we have benefited from globalisation," he added

Source : PTI

Former RBI Governor Raghuram Rajan stated that while the impact of US President Donald Trump on India is difficult to evaluate, it could potentially create opportunities for India, particularly in the area of defence cooperation and production.

In an interview with The Economic Times at Davos 2025, Raghuram Rajan discussed the impact of Donald Trump's policies on India, artificial intelligence, the Indian economy, and other important topics.

Rajan described Trump's administration as not being a "typical Republican administration," adding, "Trump administration is anti-globalisation, so there is a source of worry for India because we have benefited from globalisation," he added. "We’re sending goods abroad, we’re sending services abroad, we’re also sending our people abroad – on all of which there is a concern in the Trump administration that too much is coming in," He further explained.

However, Rajan also noted that these policies could create opportunities for India, as they might prompt moves against other countries, potentially shifting business opportunities toward India.

"I do think that there may be opportunities in defence cooperation for India, especially in defence production as the rest of the world militarises more – Europe has to look more towards its own defence, The US is going to increase defence spending," Rajan added. 

Discussing the Indian economy, Rajan expressed concern over the heavy reliance on government spending while private investment remains weak. He also noted that household consumption isn't as robust as it should be. "Earlier it was weakness in the lower middle-class consumption; now the upper middle class seems to be stabilising," he added.

Meanwhile, Rajan said on Tuesday that while the Modi government has made significant strides in building infrastructure, job creation remains the most critical challenge for the Indian economy. "The government of Mr Modi has been very good on infrastructure and has built out India's infrastructure quite a bit," Rajan said during his speech at the WEF.

"But the problem is that that seems to be the primary engine of the growth. Consumption, which was the other engine earlier, is faltering. Partly, because India needs many more jobs than what you are seeing. The biggest challenge for the government is to create those jobs across the board,” he added.