{"id":14519,"date":"2026-04-28T16:39:43","date_gmt":"2026-04-28T16:39:43","guid":{"rendered":"https:\/\/d.sheep-mine.ts.net\/?p=14519"},"modified":"2026-04-28T16:39:43","modified_gmt":"2026-04-28T16:39:43","slug":"130584518-cms","status":"publish","type":"post","link":"https:\/\/d.sheep-mine.ts.net\/?p=14519","title":{"rendered":"Demand shock warning: How has US-Iran war impacted Indian economy so far? Why RBI is both cautious and confident – The Times of India"},"content":{"rendered":"


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\"Demand<\/div>\n<\/div>\n<\/div>\n
According to the RBI, cost pressures and uncertainty have taken a toll on new orders and output. (AI image)<\/span><\/div>\n<\/section>\n<\/div><\/div>\n<\/div>\n

When it comes to the Indian economy<\/a>, domestic resilience is often cited as its biggest strength. But how long can the Indian economy continue to hold well as external pressures in the form of supply disruptions and rising import prices pile pressure? In its latest bulletin the Reserve Bank of India<\/a> (RBI<\/a>) has pointed to emerging pressure points, while at the same time exuding confidence in India\u2019s ability to withstand shocks.For RBI the situation is clear: The resilience of the global economy, already inflicted with trade tensions, is being tested by the conflict in West Asia. The near halt in tanker movements through the Strait of Hormuz has intensified pressures in the global supply chains. The durability and intensity of the conflict pose substantial uncertainty to the global growth prospects amidst broader supply chain disruptions and elevated energy prices.The standstill tanker traffic in the Strait of Hormuz caused a significant disruption in the global supply chains in March. The World Bank Commodity Price Index rose sharply, driven by higher energy and fertiliser prices, says RBI.In this scenario, India is not immune to global shockwaves – but it’s managing to hold on for now. \u201cThe Indian economy continues to hold its ground despite facing a major supply shock due to the conflict in West Asia,\u201d says RBI. <\/p>\n

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\"Global<\/div>\n<\/div>\n

Rupee, markets & external sector<\/span>The key external sector vulnerability indicators, viz., external debt-to-GDP ratio, net international investment position (IIP) to GDP ratio, and debt service ratio, remained contained at end-December 2025, says RBI. Also, India\u2019s foreign exchange reserves remain comfortable, providing cover for goods imports of around 11 months and around 92 per cent of the external debt outstanding as at end-December 2025. <\/p>\n

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\"External<\/div>\n<\/div>\n

As the war has led to a decline in many global stock markets, Indian equities have also come under pressure. \u201cIndian equity markets declined in March amidst persistent uncertainty and selling pressures by foreign portfolio investors before recovering moderately in April on the announcement of temporary ceasefire and moderation in crude oil prices. Net FPI outflows surged in March and the net selling continued into April,\u201d notes RBI.The rupee, already dealing with depreciation due to FII outflows, has been dealt with another blow in the form of the war. <\/p>\n

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\"Forex<\/div>\n<\/div>\n

\u201cAmidst financial market volatility due to the West Asia conflict, the Indian rupee witnessed depreciation against the US dollar in March. The depreciation pressures were, however, arrested in April following the measures taken by the Reserve Bank and the announcement of a ceasefire between the US and Iran. In real effective terms, the Indian rupee depreciated in March due to depreciation of INR in nominal effective terms and relatively lower inflation in India vis-\u00e0-vis its major trading partners,\u201d the central bank says.What indicators suggest about India\u2019s situation<\/span>What does the latest data suggest about how India\u2019s various sectors are bearing the impact of higher crude prices and input costs, raw material supply disruptions?According to the RBI, available high-frequency indicators of economic activity displayed divergent trends in March: the demand conditions remained resilient, despite some pockets of slowdown in economic momentum. <\/p>\n

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\"Foreign<\/div>\n<\/div>\n

However, RBI\u2019s forward looking surveys point towards softening consumer confidence on the current situation and moderation in business optimism along with buildup of cost pressures. These need to be watched out, and the duration of the Middle East conflict will be an important deciding factor in how deeply the disruptions may impact economic growth.The situation is summed up in a few points:<\/p>\n

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