“India’s macroeconomic fundamentals remain strong. The unfolding global developments nevertheless pose downside risks in terms of spillovers,” the report said.
The ongoing geopolitical crisis has increased uncertainty in the global macroeconomic and financial landscape even as the global economy struggles to recover from the pandemic, the Reserve Bank of India (RBI) said in its State of the Economy report, released Thursday. was published as part of its March Bulletin. India’s economy is experiencing spillovers from the conflict between Russia and Ukraine as it recovers from the third wave of the pandemic, the report said.
“India’s macroeconomic fundamentals remain strong. The unfolding global developments nevertheless pose downside risks in terms of spillovers,” the report said.
In its assessment of India’s macroeconomic indicators, the report noted the upward trend in consumer prices. Total inflation of the consumer price index (CPI) rose slightly in February 2022 from 6% in January to 6.1%. The report attributed the rise in headline inflation to month-on-month price changes of 24 basis points (bps) in February, which were partially offset by favorable base effects – month-on-month change in prices a year ago – of 19 bps.
Price hikes by Original Equipment Manufacturers (OEMs) to curb input inflation and higher retail fuel prices have increased the cost of ownership of capital goods, the report said. Fuel inflation declined for the fourth consecutive month in February. Sales prices for petrol and diesel in the four major metropolitan areas have so far remained unchanged in March.
While liquefied petroleum gas (LPG) prices remained stable, kerosene prices rose in the first half of March
Last week, RBI Deputy Governor Michael Patra said that while international crude oil prices pose an overwhelming risk, the room to adjust excise taxes could slow the pass-through to consumer prices. The RBI would therefore treat the rise in crude oil prices as a monetary policy supply shock, Patra said.
This post Indian economy faces downside risks from Russia-Ukraine war: RBI
was original published at “https://www.financialexpress.com/economy/indian-economy-faces-downside-risks-from-russia-ukraine-war-rbi/2464383/”
