India’s economy remains on a path of “cautious resilience” despite mounting global uncertainties, although risks stemming from rising energy prices and a potentially weak monsoon warrant close monitoring, the finance ministry said in its monthly economic review released on Saturday, 30 May.The ministry said domestic economic fundamentals remain broadly intact. However, India cannot fully shield itself from the fallout of escalating tensions in West Asia, particularly if disruptions to global energy supplies persist.
According to the report, disruption in the Strait of Hormuz remains the “single most consequential variable” for India’s external sector and inflation outlook.
Any prolonged disruption could keep energy prices elevated, adding pressure to inflation and growth.The ministry warned that recent fuel price increases, coupled with rising upstream cost pressures, could gradually be passed on to consumers through higher transport, energy and food costs in the coming months.While retail inflation remains below the Reserve Bank of India’s (RBI) target, the inflation outlook requires continued vigilance.India’s annual retail inflation edged up to 3.48% in April, but the report cautioned that any further escalation in global energy prices could erode the current inflation cushion more quickly than expected.The report also highlighted weather-related risks. A below-normal monsoon or a significant rainfall deficit could intensify food price pressures alongside energy-driven inflation. Such a scenario could weaken rural demand and weigh on overall economic growth.”The confluence of elevated global energy prices, a depreciating rupee, rising upstream cost pressures and the prospect of a below-normal monsoon calls for sustained policy vigilance,” the ministry said.At the same time, the report suggested that policymakers may not immediately respond to emerging inflationary pressures. “Second-round effects and their persistence must be evident in the data before policy responses are triggered,” it said.The finance ministry publishes its monthly economic review to assess developments across key sectors of the economy and highlight emerging risks to growth and inflation.(Edited by : Vivek Dubey)First Published: May 30, 2026 12:47 PM IST
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