Mumbai: Reserve Bank of India Governor Sanjay Malhotra said the current crisis in West Asia is greatly affecting India, as the region accounts for nearly one-sixth of the country’s exports, half of its crude oil imports, and nearly two-fifths of inward remittances.
During his address at Princeton University on April 18, 2026, the Governor highlighted that the Indian economy has demonstrated resilient growth over the past decade, supported by strong policy frameworks, financial stability and sound fiscal policies.
He noted that in response to the ongoing crisis, India is working to increase its domestic oil and gas production. He added, “Sources of imports are being diversified. Although there is no shortage of oil, given the reserves we reserve, there is some rationing in the use of gas for industrial purposes.”
Malhotra stressed that while oil marketing companies and the government have absorbed some of the price pressures on oil, part of the pressures on gas prices have been passed on to consumers.
He pointed out that India achieved an average growth rate of 6.1 percent annually over the past decade, compared to the global economy’s growth rate of 3.2 percent. In contrast, India’s closest peers, such as China and Indonesia, achieved growth of 5.6 percent and 4.2 percent, respectively.
He emphasized that the resilience of the Indian economy stems from strong policy frameworks and strong, credible institutions that have been developed over time.
He said in his speech, “Given the current crisis, it affects us in particular, as the West Asia region contributes about one-sixth of our exports, one-fifth of our imports, half of our crude oil imports, two-fifths of our fertilizer imports, and about two-fifths of our internal transfers.”
Malhotra stressed that the appropriate monetary policy response to such a supply shock is to look beyond first-round effects, provided it does not lead to longer-term second-round dynamics.
He added: “Round-round effects are the real concern. They could materialize if supply chain disruptions persist for a long period. After that, what started as a supply shock could become embedded in the overall price level. Preventing this entrenchment is where monetary policy has a fundamental role to play through its impact on inflation expectations rather than severe pressure on demand.”
Malhotra noted that in uncertain times like these, it is important to be agile and nimble, maintain a broad policy stance, and avoid making firm commitments to the future policy path. He added that in such circumstances, the RBI’s general approach was to rely more on data and continuously reassess the balance of risks.
“So we are in a wait and watch mode now. Moreover, we have maintained a neutral stance over the past few policy cycles. It maintains flexibility to respond as inflation and growth dynamics evolve,” he said.
Moreover, Malhotra said that fiscal consolidation has advanced steadily in recent years, with improved efficiency of tax collection and improved quality of spending.
He pointed out that the government has supplemented monetary policy measures with supply-side measures to alleviate price pressures over the years.
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