The Reserve Bank of India’s April bulletin highlights risks arising from the ongoing West Asia conflict, which has continued for nearly 2 months.
The disruption has affected global supply chains, with some easing seen in early April following a temporary pause in tensions.
The report states that a prolonged disruption could lead to higher energy costs, increased input prices, interruptions in trade flows, and spillovers to financial markets.
The bulletin notes that supply-side shocks may not remain limited to production costs. It flags the possibility of these disruptions feeding into demand conditions over time.
Such second-round effects, where supply constraints begin to affect consumption and investment, require continued monitoring amid uncertainty over the duration of the conflict.
Inflation remains within the tolerance band, though risks have tilted upwards. Supply constraints and weather-related factors have added pressure to the outlook.
Measures taken to manage supply bottlenecks have helped contain price levels so far, but the situation remains dependent on both global developments and domestic conditions.
Recent data indicates mixed trends across sectors. Demand conditions have remained stable, though some indicators suggest a moderation in activity.
Port cargo volumes and air passenger traffic have shown early signs of slowing. The index of 8 core industries fell to a 19-month low, driven by lower output in fertilisers, crude oil, coal, and electricity.
Survey-based indicators show slower growth. The manufacturing PMI remains in expansion territory but has declined to its lowest level in nearly 4 years. Growth in new orders and output has eased to levels last seen in mid-2022.
The services PMI continues to expand, though at a slower pace, with growth easing to a 14-month low amid softer demand for new business.
The India Meteorological Department has forecast the 2026 southwest monsoon at 92% of the long-period average, indicating below-normal rainfall. This would be the first such instance since 2023.
Higher sowing of pulses, oilseeds and coarse cereals may provide some support, though risks remain due to rainfall variability and input availability.
The rupee depreciated by more than 4% in March before recovering in early April following policy measures and easing geopolitical tensions. It has since weakened again over recent sessions.
Foreign exchange reserves remain at comfortable levels, covering around 11 months of imports and about 92% of external debt as of end-December 2025.
Read More: Centre Increases Wheat Procurement Cap to 10 Million Tonnes for Madhya Pradesh!
The bulletin indicates that supply disruptions, external uncertainties and weather conditions may continue to influence economic activity in the near term, even as demand conditions remain steady.
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Published on: Apr 24, 2026, 2:54 PM IST
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