RBI Warns of Risks to the Indian Economy

The Reserve Bank of India, in its latest bulletin, warned that India’s economy could face growth challenges if the US-Iran agreement collapses or if the southwest monsoon performs poorly. The RBI stated that geopolitical tensions and trade disruptions continue despite the temporary peace agreement between the two countries.

The bulletin noted that a breakdown of the agreement could trigger inflationary pressures, disruptions in energy supplies, slower investments, food security concerns, and financial instability. However, India’s economy recorded a strong GDP growth of 7.8 percent in the final quarter of 2025-26, supported by private consumption and fixed investments.

The RBI said economic activity remained stable during April and May of the current financial year. It also highlighted strong foreign trade, healthy foreign exchange reserves, and rising foreign investments. However, prices of rice, wheat, pulses, potatoes, onions, tomatoes, edible oils, and higher LPG costs could add to inflationary pressures.