Iran-Israel war poses near-term challenges to Indian economy: RBI MPC member

Nagesh Kumar, an external member of the Reserve Bank of India's rate-setting panel, stated that while the ongoing conflict in West Asia poses immediate challenges to the Indian economy, it is unlikely to significantly impact long-term economic growth. These challenges include rising oil prices, export disruptions, and potential remittances losses. However, he believes diversification of oil sourcing and the opening up of Venezuelan oil supplies could mitigate risks. Kumar also highlighted that India's inflation outlook remains benign, projecting a CPI of 2.5% in FY2026. Despite geopolitical tensions, he sees an opportunity for India to achieve higher GDP growth rates from around 7% to 8%, driven by a robust manufacturing sector and service sector dynamism.