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ARTHA
A. K. Bhattacharya
Editorial Director and
Former Editor,
Business Standard
Dealing with the
West Asian Turmoil
t hat the West Asian conflict will Retail inflation rose to a 10-month high of
adversely impact the Indian
3.21 per cent in February 2026, thanks
economy is a foregone
conclusion. Not just the external sector, to a sharp increase in food prices. The
earlier projection of retail inflation
but the pace of activity in the domestic staying in the range of 2.1-3.1 per cent in
economy will also take a hit. The latest 2025-26 will probably be revised
monthly economic review, released by upwards and the year may end closer to
the Union Finance Ministry, has given an 4 per cent. In the previous three years,
idea of the economic challenges the retail inflation had declined steadily from
country will have to face. 6.7 per cent in 2022-23 to 5.4 per cent in
2023-24 and further down to
The government now believes that there 4.6 per cent in 2024-25.
is “a considerable downside” risk to the
earlier economic growth estimate of 7 to Remember that the February 2026
7.4 per cent for 2026-27. Excluding the number on retail inflation does not
post-Covid bounce-back in economic capture the full impact of rising crude oil
growth to over 9 per cent in 2021-22, prices. The Indian Basket crude oil price
India’s gross domestic product (GDP) averaged around $69 per barrel in
had grown at a stable annual average February 2026, and the March number
rate of a little over 7 per cent in the has already jumped to around $112 a
following three years. In 2025-26, barrel. Thus, the pace of deceleration in
growth is estimated to be higher at 7.6 retail inflation, seen from 2022-23 to
per cent. It now appears that the West 2024-25, will be contained in 2025-26,
Asian conflict will result in a deceleration and for 2026-27, the trajectory may be
in the growth rate in 2026-27. northward.
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