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Informist, Wednesday, Apr. 8, 2026

 

MUMBAI - Dipti Deshpande, principal economist, Crisil Ltd., said the following on the Reserve Bank of India's first bi-monthly monetary policy statement for 2026-27 (Apr-Mar) detailed Wednesday:

 

The Monetary Policy Committee of the Reserve Bank of India maintaining status quo on both the policy rate and monetary policy stance was along expected lines. The raft of uncertainties bred by the West Asia conflict calls for prudence. It would be premature to draw firm conclusions on the impact or pre-empt the ultimate outcome of the West Asia conflict. At this juncture, all that is required is keeping ready adequate policy buffers and staying nimble to act as the situation evolves.

 

So far, the availability of fiscal space to absorb part of the higher energy costs due to the conflict has contained their impact on retail inflation. The government has directed supply of liquefied petroleum gas and liquefied natural gas to domestic consumers and priority sectors and maintained retail petrol and diesel prices (standard variant). However, if crude oil price pressures persist, the upside risks to retail inflation are inevitable.

 

The projections on growth and inflation--the first estimates by the MPC for fiscal 2027 following the release of the new data series--reflect the recognition that the impact on growth could be greater than that on inflation in the near term. Part of the moderation in India's GDP growth expected is also due to a statistical high-base effect of fiscal 2026. The MPC projects inflation at 4.6% for fiscal 2027, within its target range. The committee expects GDP growth to moderate to 6.9% this fiscal from 7.6% in the previous year.

 

Additionally, producers are bearing the brunt of the dual shock of energy and other input shortages and price spikes, which could impact economic growth. Some impact on the economy could be enduring, though the overall fallout will depend on the duration and intensity of the conflict.

 

The MPC's clear commitment to stay proactive and pre-emptive in liquidity support provides comfort. Financial markets have responded more to global market volatility than what the real sector indicators have shown so far. The RBI has demonstrated its ability to tame excessive volatility using multiple instruments, ranging from open market operations to regulatory measures in the forex market. It has kept systemic liquidity in surplus till date despite volatile foreign capital flows.  End

 

Compiled by Ashutosh Pati

Filed by Akul Nishant Akhoury

 

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