In a bold and reassuring move, the Reserve Bank of India (RBI) on April 9, 2025, slashed the policy repo rate by 25 basis points, bringing it down to 6.00%, and shifted its stance to “accommodative”. This decisive monetary easing comes at a critical juncture, just days after the United States imposed a 26% tariff on a wide range of Indian goods, sending ripples through global trade corridors. Far from being a cause for panic, this moment underscores the quiet resilience and bold readiness of the Indian economic machinery and at the heart of this preparedness is the steady hand and forward-thinking vision of the Modi government, whose robust economic architecture is allowing India to turn a headwind into an opportunity for recalibration, recovery and resurgence.
A Calm Response to Global Uncertainty
While some economies are rattled by external shocks, India’s response has been anything but reactionary. The RBI’s policy intervention was not just timely it was strategic. With inflation well under control at 3.61% in February 2025, and the global economy facing uncertainty, the central bank had ample headroom to stimulate growth and it did so, with the full confidence of an economy backed by robust reforms and fiscal discipline. The repo rate cut, effectively lowering the cost of borrowing for banks, businesses and consumers, sends a clear signal India is not stepping back; it is stepping forward. Lower interest rates on home loans, business credit and vehicle financing will put more disposable income in the hands of consumers and encourage private sector investments. “This is not just a cut in rates, it is a cut through the noise of fear. It is a confidence booster for India Inc.,” says a senior economist from a leading private bank.
Modi Government’s Foresight Paved the Way
The ability to respond swiftly and confidently stems from the groundwork laid by the Modi government over the past decade. The journey of reform has been tireless from the Production Linked Incentive (PLI) schemes, to Make in India, Digital India, Gati Shakti infrastructure plan and a renewed focus on fiscal prudence and Ease of Doing Business. Where many governments would have resorted to panic or populism in the face of trade tensions, the Modi administration leaned on prudence, policy and preparation. “A government that plans for tomorrow while governing for today is rare. Modi ji’s economic stewardship is a beacon of stability in an uncertain world,” remarked a senior policy analyst. Even in response to the U.S. tariffs a potentially serious blow to India’s high-performing export sectors like electronics, gems, and textiles the government has remained undeterred. Instead, it is focusing on diversification of markets, attracting fresh foreign investments and leveraging bilateral and regional trade agreements.
Repo Cut: A Push for India’s Growth Story
The rate cut aligns perfectly with the government’s vision to drive growth-led recovery, ensuring liquidity flows to sectors that need it most. Be it MSMEs, real estate or startups, cheaper credit will invigorate entrepreneurship and consumer demand. As businesses feel the pinch of U.S. tariffs, lower borrowing costs could provide the much-needed cushion to maintain momentum. “This repo cut is not just an economic decision, it’s a psychological reset. It tells investors and industries India believes in its growth story,” a Mumbai-based investor said. What makes this even more commendable is that the RBI’s move is in complete harmony with the Centre’s fiscal approach. There’s no tug-of-war between North Block and Mint Street instead, there’s synergy, stability and shared purpose.
The Modi Model: Diplomacy, Discipline, Direction
Amidst all this, it is critical to acknowledge the firm and far-sighted leadership of Prime Minister Narendra Modi. While global economies are struggling to find balance in a multipolar trade order, India is standing tall, not just because of its size but because of its sense of direction. Whether it’s global outreach, supply chain recalibration, or domestic industrial resilience, the Modi government has consistently displayed “diplomacy with dignity and economic policy with purpose.” The proactive engagement with global powers, without compromising on national interest, has ensured that India retains its position as a trusted partner and a responsible economic power. Even amid rising protectionism, India is being seen as an anchor of stability and a driver of demand. “If the world is realigning, India is not reacting it is recalibrating. And that’s the Modi effect,” observed a trade expert.
Turning Tariffs into Triggers
While the U.S. tariffs are undeniably a challenge, they may very well be the trigger India needed to accelerate internal reform and external diversification. The government’s rapid shift toward new trade corridors from Australia and UAE to the EU and Latin America shows that India’s economic diplomacy is not bound by geography but driven by opportunity And with the RBI playing its part through interest rate management and liquidity infusion, the stage is set for India to weather the global trade storm and emerge stronger.
Looking Ahead: India’s Moment to Lead
As the world watches, India is scripting a story of resilience and revival. The repo rate cut is not a standalone event it is a reflection of a much larger design where monetary policy supports economic vision, where central banks and governments move in sync, and where challenges are met not with panic but with purpose. “When the world hits pause, India hits play this is the leadership dividend of a decade of economic stewardship,”. The Modi government’s blend of pragmatism, preparation and positivity is exactly what India needs in this moment. And the RBI’s move, made possible by that very environment of stability, proves once again that India is not just reacting to global realities it is ready to reshape them.
Conclusion: The Cut That Builds Confidence
In the end, this 25 basis point cut may be a small numerical move but symbolically, it is a powerful message. It tells the world that India is ready, that India is stable, and that India is moving forward with confidence, clarity, and capability and for that, full credit must be given to the unwavering leadership and foresight of the Modi government a government that doesn’t just lead with power, but with purpose.
The author is Akshat Khetan, Founder of AU Corporate Advisory And Legal Services (AUCL)
