New Delhi, March 23: The Reserve Bank of India’s (RBI) monthly bulletin has reported that despite ongoing conflicts in the Middle East and rising global market instability, India’s economy remains robust. The second advance estimates for GDP for 2025-26 reflect this strength.
According to the RBI bulletin, economic activities in the country saw an uptick in February. The rise in inflation (CPI) was attributed to food and beverage prices. Liquidity in the system remained adequate, and there was an increase in financial support for the business sector. Additionally, India’s foreign exchange reserves are strong enough to withstand external shocks.
The report noted that the war in the Middle East and trade scrutiny initiated by the U.S. have led to increased uncertainty regarding global energy security, import tariffs, and supply chains. If this situation persists, it could impact the global economy significantly.
Domestically, it is crucial to monitor the situation given India’s reliance on crude oil. However, the RBI stated that over time, India’s economy has become more resilient to external shocks due to strong growth, a better economic foundation, and a robust foreign sector.
In terms of energy security, India has diversified its oil import sources and increased its refining capacity. Since the onset of the conflict, the government has taken several steps to mitigate the impact of global supply disruptions and to optimize the use of domestic resources.
The RBI also suggested that establishing an ‘Economic Stabilization Fund’ could provide the government with additional financial support to tackle such global crises.
GDP figures indicate that economic growth remains strong for the fiscal year 2025-26, largely driven by domestic demand. Both private consumption and investment have remained robust, with the economy growing at a rate of 7.8 percent in the third quarter.
In February, demand in both urban and rural markets remained strong, aided by lower taxes, income from the Kharif crop, and the wedding season. During this period, sales of two-wheelers, passenger vehicles, and tractors reached record levels. The agricultural sector also performed well, with food grain production expected to reach record levels in the fiscal year 2026.
Globally, tensions in the Middle East have disrupted oil and gas supplies, leading to increased volatility in commodity and financial markets. The International Energy Agency (IEA) has described this as the largest supply disruption in the history of the global oil market.
Brent crude prices have also seen significant fluctuations, rising from $78 per barrel to $112.2. Additionally, industrial products like aluminum and urea have been affected.
The RBI bulletin indicated that the energy crisis has impacted financial markets as well. In March, stock markets experienced declines, particularly in countries reliant on energy imports. Changes were also observed in the bond market, and the U.S. dollar strengthened. In this environment, major central banks around the world did not alter interest rates during February and March, adopting a cautious stance.
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DBP
Bhupendra Singh Chundawat is a seasoned technology journalist with over 22 years of experience in the media industry. He specializes in covering the global technology landscape, with a deep focus on manufacturing trends and the geopolitical impact on tech companies. Currently serving as the Editor at Udaipur Kiran, his insights are shaped by decades of hands-on reporting and editorial leadership in the fast-evolving world of technology.
