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Informist, Friday, May 22, 2026

 

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--RBI paper: Domestic econ activity resilient in April 
--CONTEXT: Comments in RBI's state of economy paper in Bulletin for May 
--RBI paper: Industrial, svcs sectors maintained strength in April 
--RBI paper: India entered W Asia war phase with strong macro econ position 
--RBI paper: Domestic demand remains key driver of growth in India 
--RBI paper: India econ near-term outlook clouded by supply side pressures 
--RBI paper: Need to monitor impact of West Asia war on domestic prices 
--RBI paper: Fincl conditions pose challenges to external sector outlook 
--RBI paper: Crude oil prices pose challenge to external sector outlook 
--RBI paper: Capital flows pose challenge to external sector outlook 
--RBI paper:Govt, RBI steps likely to cushion econ against external headwinds 
--RBI paper: Svcs exports likely to cushion econ against external headwinds 
--RBI paper:Net FDI inflows likely to cushion econ against external headwinds 
--RBI paper: FX reserves likely to cushion econ against external headwinds 
--RBI paper: Pvt non-fincl cos' Q4 results show better business performance 
--RBI paper: Latest WPI data indicative of incipient price pressures 

 

NEW DELHI – Supply side pressures caused by the West Asia war are "somewhat" clouding India's near-term economic outlook, the Reserve Bank of India's staff said. Domestic demand, prices, and external sector all face the war-led challenges, the central bank staff said.

 

"The conflict in West Asia continued to exert pressure on commodity markets, global trade flows and supply chains, contributing to the volatility in financial markets," the staff said in the monthly State of the Economy article in the RBI's Bulletin for May. "India has entered this phase from a position of macroeconomic strength. Domestic demand continues to be the key driver of growth. However, the near-term outlook is somewhat clouded by supply side pressures."

 

Comments in the article are the views of the authors and do not represent the views of the central bank.

 

While headline inflation remains firmly within the RBI's tolerance band of 2-6% as of now, the central bank staff said there is a need to be watchful of "the pass through to domestic prices". CPI inflation rose to a 13-month-high of 3.48% in April. The jump in WPI inflation to 8.30% in April is also "indicative of incipient price pressures" in India, the staff said. 

 

"The financial conditions, crude oil prices and capital flows continue to pose challenges to the external sector outlook," the staff said. "Nevertheless, robust services exports, positive net FDI (foreign direct investment) flows, foreign exchange reserve buffers, and a number of proactive policy measures undertaken by the Government and the Reserve Bank are likely to cushion the Indian economy against external headwinds," the staff said.

 

Domestic economic activity showed resilience in April despite deceleration seen in some of the indicators, the staff said. Industrial and services sectors remained "strong" across several segments, the staff said. Listed private non-financial companies during the March quarter also showed an improvement in business performance compared with the December quarter as their aggregate sales and operating profit recording a "double-digit growth", the staff said.  End

 

Reported by Shubham Rana and Shweta

Edited by Akul Nishant Akhoury

 

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