This Week In Economics (8 – 14 April)
Welcome to another edition of This Week In Economics, where I compile all the biggest economic news of the week in context of India.
Note: There is no need to make notes out of it, you can simply read the headlines and the content once in a while, that’ll be more than enough for most exams.
RBI MPC Meeting: Repo Rate Held Unchanged
The most significant event of the week was the RBI Monetary Policy Committee (MPC) outcome on April 8, 2026.
The RBI, after its three-day bi-monthly MPC meeting on April 8, 2026, decided to keep the key benchmark repo rate unchanged at 5.25%, maintaining a ‘neutral’ stance due to heightened geopolitical uncertainties in West Asia.
This was the second consecutive hold since the February 2026 meeting. The repo rate was last cut in December 2025 from 5.5% to 5.25%. The Standing Deposit Facility (SDF) was kept at 5%, and the Marginal Standing Facility (MSF) and Bank Rate at 5.5%.
RBI Governor Sanjay Malhotra noted that the West Asia conflict is set to impact India’s growth due to higher input costs from rising energy, international transport, and insurance prices.
CPI Inflation Data
India’s annual inflation rate rose to 3.4% in March 2026 from 3.21% in the previous month, the largest inflation rate in over one year, though it came below median market expectations of 3.48%.
This was the third reading under India’s new CPI, which updated the weights of different goods within the index according to the Household Consumption Expenditure Survey, increasing the weight of non-food goods in the domestic consumer basket.
CPI inflation for FY 2026-27 is estimated at 4.6% by RBI, with rates expected to rise from 4% in Q1 to 5.2% in Q3 before cooling to 4.7% in Q4.
WPI Inflation Data
India’s wholesale prices increased 3.88% year-on-year in March 2026, accelerating from 2.13% in February and surpassing expectations of 3%.
Fuel and power rebounded with a 1.05% rise, the first rise in a year, boosted by recovery in petrol and HSD prices. Manufacturing inflation accelerated to 3.39%, the fastest since November 2022, led by textiles, leather, and chemicals.
World Bank India Development Update
The World Bank, in its India Development Update released on April 9, 2026, projected India’s growth at 6.6% in FY27, as higher energy prices caused by the Middle East conflict and supply chain disruptions weigh on economic activity.
Despite the slowdown, India remains among the fastest-growing major economies in the world. The report highlighted India’s strong macroeconomic fundamentals, substantial foreign reserves, low inflation, predominantly rupee-denominated public debt, and a healthy financial sector, as buffers against external headwinds.
Inflation Targeting Framework Renewed
India reaffirmed its inflation-targeting framework, setting a 4% retail inflation goal with a tolerance band of 2–6% for the five years from April 2026 to March 2031, via a gazette notification by the Department of Economic Affairs in consultation with the RBI.
This marks the second consecutive extension of the framework, first introduced in 2016 and renewed in 2021.
West Asia Crisis
The West Asia crisis has hit Indian domestic carriers’ growth trajectory, with international departures cut by 40% and loss of passenger traffic by 36.5% in March year-on-year. April is the worst-hit month.
The government announced a domestic insurance pool with a sovereign guarantee of ₹12,980 crore to facilitate continuous maritime insurance coverage.
LPG supplies are under close monitoring amid prevailing geopolitical tensions, even though no dry-outs have been reported at distributorships.
India’s current account deficit (CAD) is at risk due to trade disruptions and elevated crude oil prices, increasing fears of a widening deficit.
Ciao, until next week’s edition.
