The Reserve Bank of India (RBI) said on Monday that India’s economy remains resilient enough to withstand external shocks but warned that the escalating conflict in West Asia requires close monitoring and proactive policy action because of the country’s heavy reliance on crude oil imports. The assessment appears in the RBI’s March State of the Economy report.
“Given India’s external dependence on crude oil, the evolving situation requires close monitoring and proactive measures to limit adverse spillovers,” the central bank said, noting that the geopolitical flare-up and renewed trade frictions have revived concerns over energy security, tariffs and global supply chains while boosting volatility in commodity and financial markets.
Despite these headwinds, the RBI argued India’s capacity to absorb external shocks has strengthened over time, supported by robust growth, sound macroeconomic fundamentals and strong external-sector buffers. The central bank said foreign exchange reserves remain adequate to cushion the economy from global turbulence.
India’s forex reserves stood at $709 billion as of March 13, after a record $729 billion in February. According to the RBI, these reserves cover roughly 11.2 months of goods imports and about 95% of the country’s outstanding external debt, bolstering the country’s external defence against sudden shocks.
The RBI has been active in currency markets to curb volatility. The rupee has weakened about 8.7% in the current fiscal year and roughly 2.9% since the onset of the West Asia conflict, ending at 93.97 against the US dollar on Monday-a level the report says was reportedly supported by central bank dollar sales.
On energy security, the RBI highlighted measures taken since the conflict began to blunt immediate disruptions in global fuel supplies and to make more effective use of domestic capacity. The report notes India has progressively diversified crude import sources and expanded refining capacity, and it references the government’s plan to create an economic stabilisation fund to build buffers and add fiscal flexibility in crises.
Global conditions deteriorated sharply in recent weeks: uncertainty rose in February after four months of easing, driven in part by renewed trade tensions following a US court ruling on tariffs. Since late February, the West Asia tensions have disrupted key energy infrastructure and routes such as the Strait of Hormuz, triggering volatile crude prices, pressure on emerging-market currencies, and a flight of investors to safe-haven assets. The RBI said these developments warrant careful monitoring and timely policy responses.
Original Source: https://www.firstpost.com/business/india-well-placed-to-absorb-global-shocks-but-west-asia-crisis-needs-vigilance-rbi-13992428.html
Category: India
Tags:
Publish Date: 2026-03-24 06:00:00
