RBI MPC Meeting Commences Against Backdrop of Global Tensions

The Monetary Policy Committee of the Reserve Bank of India (RBI) has commenced its bi-monthly meeting from April 6, with the results to be announced on April 8. The six-member panel will decide on the repo rate, which currently stands at 5.25%, according to RBI data.

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

The RBI MPC meeting is taking place amid elevated global uncertainty due to the ongoing conflict in West Asia, which has disrupted energy supplies and increased crude oil prices, as reported by Reuters.

Crude Oil Surge And Supply Disruptions

The prices of Brent crude oil have risen sharply to $118 per barrel at one point and now remain at approximately $100 per barrel according to Reuters. The reason for this sharp increase is due to the unrest in the Strait of Hormuz, a vital oil transport route in the world.

This oil passage usually accommodates 200 to 300 ships each week; however, due to this unrest, the number of ships passing through has dropped significantly.

India imports around 85–90% of its crude oil requirements, with 40–52% routed through the Strait of Hormuz, according to government data. This makes the country sensitive to supply disruptions and price increases.

Impact On Currency And Capital Flows

The rupee currency has depreciated by about 4.1% since the last day of February 2026, having reached an all-time low of 92.35 against the U.S. dollar in March.

Foreign institutional investors sold approximately ₹1.2 lakh crore worth of Indian equities in March, according to exchange data. The equity markets also registered a fall of more than 5% in their recent trading periods, leading to a fall of more than ₹12 lakh crore in their market cap value.

Impact Sector-wise Across the Country

Due to an increase in fuel prices and logistics, many industries have been impacted, such as airlines, transportation, chemicals, and manufacturing, along with fertiliser worries due to dependence on the Gulf region for fertiliser imports.

Middle East remittances make up roughly 30% of India's total remittances and also represent 1% of its GDP, which means that the situation may be sensitive for India.

Growth And Inflation Estimates

HSBC estimates indicate that if crude oil averages $80 per barrel, India’s GDP growth could be 6.3%, compared to earlier expectations of 7%. If prices remain near $100, growth could be closer to 6%, according to HSBC data.

The Chief Economic Advisor has stated that if crude oil prices remain at $130 per barrel for two to three quarters, inflation could rise to 5.5% and growth could moderate to 6.4% in FY27, based on official statements.

Policy Decision In Focus

The RBI had earlier projected FY26 GDP growth at 7.4% and inflation at 2.1% in its February 6 policy statement. However, current estimates indicate inflation in the range of 4.5–5.1% and growth expectations of 6.5–6.7%, according to recent assessments.

The MPC’s decision on April 8 will provide clarity on the central bank’s policy stance amid evolving global and domestic conditions, with the outcome reflecting the current economic environment shaped by external developments.