President Trump's impact on India is hard to assess, said Raghuram Rajan, Katherine Dusak Miller Distinguished Service Professor of Finance at Chicago Booth and former Governor of RBI. In a conversation with ET, Rajan discussed the state of the Indian economy, balancing job creation with AI, and, of course, Trump. Edited excerpts:What's your take on Indian economy?We certainly saw, in the last quarter, a slowing. The key issue is: is it a reflection of things to come or an aberration? Part of what's going on is that the infrastructure spending slowed, maybe because governments were distracted by elections, and so on. But it is a little worrisome that there is so much dependence on government spending when the private investment is weak and consumption by the household is also not as strong as it should be. Earlier it was weakness in the lower middle class consumption; now the upper middle class seems to be stabilising. So, part of the issue is, how much of the strong growth was just recovery growth from the calamity of the pandemic, and how much was truly strong, sustainable growth.Do you see a divergence in the Indian economy that a certain group of people or certain sections are doing really well, and some are not?Till recently that was certainly the case - the upper-middle class doing well because the stock market is doing well, because house prices started climbing again, and also because they had the jobs... Also, big firms have been doing well. That's why some of us have been warning about a K-shaped recovery for a number of years now. I am not happy that we have slowed, but I do think it's a wakeup call... What is our sustainable pace without everything being driven by infrastructure?Do you think taxation is becoming a problem for people now?In the sense of being too high? If you're not generating strong income growth, then anything is going to be problematic. But I don't think that, at our levels of taxes, especially, that that's a huge problem. I would say we need to reexamine it every time. But I would say the more important issue is that we need stronger job creation.117466630Will Trump be good for India?It's hard to say. I think that on the one hand, India has enjoyed strong relationships with Republican governments-you can think of the relationship we had with the Bush government. But on the other hand, Trump's administration is not the typical Republican administration. I think, by its very nature, the Trump administration is anti-globalisation, so there is a source of worry for India because we have benefited from globalisation. 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. Clearly, if it was just purely what they do on those, then it has to be negative. The flip side-if it creates opportunities for India because maybe they move against some other countries, which move business then to India, that may be good. I do think that there may be opportunities in defence cooperation for India, especially in production as the rest of the world militarises more.