Five months after the Iran war raised fears of an inflation spike and an economic downturn, Indian officials are sounding more confident as the worst of those concerns have so far failed to materialize.
Inflation picked up slightly last month but remained within the Reserve Bank’s 2%-6% tolerance band, data Wednesday showed. Consumer demand has also held up, with vehicle sales at record levels, credit growth climbing to a two-year high and GST receipts rising at a double-digit pace.
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The resilience is a welcome surprise for an economy that had appeared particularly vulnerable to the surge in oil prices triggered by the conflict. While questions remain over the durability of growth — and monthly indicators can be volatile — the outlook is less precarious than it appeared in March.
Governor Sanjay Malhotra reflected that shift this week, pointing to resilient growth, inflation “more or less under check,” healthy corporate balance sheets and a “robust” external sector as reasons for confidence.
“What is amazing and what’s important to keep in mind,” Malhotra said at a banking conference in Mumbai, is that India emerges “much stronger” from every crisis.
