Overview
- The RBI’s Monetary Policy Committee minutes, released Wednesday, warn that disruptions linked to the Strait of Hormuz pose downside risks to growth and upside risks to inflation, tying the threat to a narrow Gulf corridor that carries a large share of global oil.
- Policy stays on hold with the repo rate at 5.25% and a neutral stance, as the RBI focuses on data and expectations to avoid wage and core‑price spirals rather than using blunt rate moves against a supply shock.
- Moody’s cuts India’s FY27 growth forecast to 6% and says a longer Gulf disruption could entrench inflation, strain fiscal and monetary room, and test investor confidence as heavy foreign outflows and rupee pressure persist.
- Governor Sanjay Malhotra cites India’s exposure to West Asia for oil, fertilisers, and remittances and notes steps such as ramping domestic oil and gas output, diversifying import sources, and rationing industrial gas that ease shortages but risk higher costs for households and farms if LPG tightens.
- Debate over currency management intensifies as former RBI governor Duvvuri Subbarao urges minimal forex intervention and a gradual, managed rupee depreciation, even as India’s roughly $710 billion in reserves provides a buffer.