By Manoj Kumar
NEW DELHI, – Geopolitical tensions, high oil prices and tighter global financial conditions could raise India’s imported inflation, a government report said on Thursday, while warning that a strong El Nino could hurt winter crops. However, it cautioned that supply disruptions, volatile energy prices and global uncertainty could pose near-term risks to inflation, the rupee and capital flows. India entered the second quarter of 2026/27 with strong domestic activity, exports, capital inflows and foreign exchange reserves, the finance ministry said in its September Monthly Economic Review. Federal Reserve’s 25-basis-point rate hike in September.
“Geopolitical tensions and elevated crude oil prices could also add to imported inflation pressures,” the report said, particularly after the U.S.
Foreign-exchange reserves stood at $765.9 billion as of Sept. 18, providing import cover of about 11.1 months.
India’s external sector remained resilient, supported by services exports, remittances, forex reserves and capital inflows, the report said.
Retail inflation rose to 4.82% in August, while food inflation stood at 5.95%. Wholesale inflation accelerated to 9.92%, driven in part by renewed fuel and power price pressures.
The report said the Reserve Bank of India’s recent open market operations to absorb surplus liquidity could help maintain balanced financial conditions and curb “undue demand-side overheating.
