Chances of getting trumped.

The Indian economy grew by 7.2% in the last quarter ending on 31 December, wrote R Nair. Consumer demand fell to 5.6% of GDP but investment demand went up to 12%. The 3 sectors which lagged were mining, utilities, comprising of electricity, gas and water, and trade, which includes hotels, transport and communication services. Although Gross Value Added for the full year is expect to increase, agriculture and manufacturing are expected to weaken. Most of the growth was due to government spending which rose to 6.1%. "In fact, the biggest engine of growth continues to be government spending, which is supposed to grow by 11 per cent in real terms this year," wrote M Sharma. "Put that together with India's troubling fiscal deficit -- which is pushing seven per cent of GDP when both the federal and state governments are included, one of the worst figures in the G-20 -- and this revival starts to look a bit unsustainable." The central government's fiscal deficit reached 113.7% of GDP till the end of January. That may not be the final figure because advance tax collections from companies tend to jump in March. However, the government cannot increase spending to protect against a fall in growth, without making the deficit significantly worse. This is where Donald Trump comes in. Prime Minister Modi criticised Trump for protectionism at the World Economic Forum in Davos in January. "The result of this is that we are seeing new types of tariffs and non-tariff-based barriers being imposed," he said. Indeed. Following that speech the Finance Minister massively hiked customs duty on almost all imported goods, in next year's budget. Not just that, sly taxes, camouflaged as Education Cess and Social Welfare Surcharge, went up from 3% to 10%. The Prime Minister would surely have known about this while he was serving bromide at Davos. Trump is complaining that India taxes Harley-Davidson motorcycles at 50% while the US levies no taxes on exports of motorcycles from India. India exports few motorbikes to the US but that is not the worry. Trump has just announced a 25% tariff on imports of steel and 10% on aluminium. Other countries have threatened retaliation but Trump tweeted, "When a country (USA) is losing billions of dollars on trade with virtually every other country it does business with, trade wars are good, and easy to win." India has a positive trade balance of $30 billion with the US and Trump could levy taxes on anything he wants. The Federal Reserve is expected to raise the Federal Funds Rate more aggressively this year which could hit the rupee and Indian share prices. General elections by May of next year. Trump could trump Modi.