India’s economy expands at 7.8% over January to March India’s economy expanded by 7.8% in the January-March quarter, surpassing expectations despite economic disruptions from the Middle East conflict. However, the central bank has raised inflation projections and tempered growth forecasts due to energy supply disruptions, a depreciating rupee, and potential weather-related issues. The Reserve Bank of India has adopted a cautious policy stance in response to deteriorating global economic conditions.

• India’s economy grew by 7.8% year-on-year in the three months to March.
• This growth exceeded the forecasted 7.2% due to improved trade prospects with the EU and reduced US tariffs.
• The Middle East conflict, starting in late February, poses a significant risk to India’s economy, potentially hurting growth and raising inflation.
• India’s central bank raised its inflation projection for the financial year ending March 2027 to 5.1% and lowered the growth forecast to 6.6%.
• Energy supply disruptions have increased India’s import bill and put pressure on the rupee.
• El Nino weather patterns could lead to crop shortages and higher food prices.
• The Reserve Bank of India has adopted a ‘cautious’ policy due to deteriorating global economic conditions.