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Informist, Monday, Mar. 23, 2026

 

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--RBI paper: Prolonged war in West Asia detrimental to global outlook 
--Commodity prices rose sharply in Mar on conflict in West Asia
--West Asia conflict led to increased volatility in global mkts 
--Govt's econ stabilisation fund gives space to respond to risks 
--Need to monitor W Asia situation due to India's dependence on oil 
--India FX reserves adequate to cushion against external shocks 
--2nd advance estimate for FY26 GDP shows sustained econ resilience 
--High frequency data shows econ activity gaining momentum in Feb 
--Indian econ's resilience to external shocks has strengthened

 

NEW DELHI – The conflict in West Asia and fresh trade investigations by the US have led to increased volatility in global markets, the Reserve Bank of India's staff said. "Prolonged period of war and high uncertainty would be detrimental to the broader global outlook, which was already in a state of flux prior to the recent events," the staff said in the monthly State of the Economy article in RBI Bulletin released Monday.

 

The report said India's external dependence on crude oil amid the evolving situation "requires close monitoring and proactive measures to limit adverse spillovers even though it is mention-worthy that the capacity and resilience of the Indian economy to absorb external shocks have strengthened over time, buttressed by its strong growth, sound macroeconomic fundamentals and robust external sector buffers." It said India has progressively diversified its crude oil import sources and augmented its domestic refining capacity. Comments in the article are the views of the authors and do not represent the views of the central bank.

 

Following the US and Israel attack on Iran from Feb. 28, crude oil prices had soared well above $100 per barrel, with Brent trading around $114 per barrel earlier in the day. The surge in prices was mainly due to a loss of supply from the Strait of Hormuz, a critical chokepoint which transits roughly 20% of the global oil supply.

 

Commodity prices underwent a sharp shift in March following the start of the military conflict in West Asia, the report said. "The upturn in commodity prices has been broad-based, accompanied by an intensification of price volatility."

 

Earlier in the day, Prime Minister Narendra Modi termed the situation in West Asia "worrying" and said the military conflict in the region is throwing up "unprecedented" economic, energy, security, and humanitarian challenges.

 

Lauding the Economic Stabilisation Fund set up by the government to tackle the contemporary uncertain geopolitical conditions, the report said it would provide fiscal headroom and buffer to proactively respond to global headwinds. 

 

It also said that India's foreign exchange reserves remain adequate to provide a cushion against external shocks. India's foreign exchange reserves were at $709.76 billion as of Mar. 13, rising $41.43 billion in the current financial year

 

The report said high-frequency indicators signal economic activity gaining momentum in February. "The second advance estimates of GDP for 2025–26 indicate sustained resilience of the Indian economy." The second advance estimate, based on the new GDP series, projected a growth of 7.6% in FY26, up from 7.4% in the first advance estimate based on the previous series.  End

 

US$1 = INR 93.97

 

Reported by Sagar Sen

Edited by Saji George Titus

 

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