RBI to reassess growth-inflation outlook as oil prices surge

The RBI chief acknowledged that rising crude oil prices stemming from the ongoing West Asia crisis will have implications for India's inflation outlook, though the ultimate impact will hinge on how much of the increase is passed through to consumers. Crude oil prices for India's energy basket have risen sharply, climbing from an average of $82 per barrel in July to $90 per barrel in August, Malhotra noted during an interview.

"Crude has gone up. July was for the Indian basket an average of 82 billion dollars. August it has gone up to 90 billion dollars and so that will certainly have some impact, but it will depend again on the pass-through," the governor said, emphasizing that the government has substantially cushioned domestic price pressures.

On the external sector front, Malhotra reported robust progress in the RBI's forex management operations. The recently concluded FCNR(B) deposit swap facility attracted inflows totalling $127.22 billion, with nearly 50 per cent of mobilised funds committed to five-year tenors. This high proportion of longer-duration deposits reflects sustained foreign investor confidence in the Indian economy.

The RBI's next monetary policy meeting will provide the platform for a detailed reassessment of the interplay between growth momentum and inflation pressures, as policymakers navigate the twin challenges of external commodity price shocks and domestic economic expansion.