How govt & RBI made US-Iran war a 'non-event' for Indian economy
The economy has shown resilience in the face of multiple crises. GDP growth is just one aspect of the story. Foreign exchange reserves have recently hit an all-time high. GST collections - an important high frequency indicator - are robust. India’s exports have successfully diversified into new markets even as Free Trade Agreements load in the background to provide a supportive effect.
India’s economy has managed to avoid the negative impact of the US-Iran war, growing at a rate of 7.8% in the first quarter of 2027. This success is attributed to the country's domestic consumption-led growth and resilience. Foreign exchange reserves hit an all-time high, and GST collections remained robust. Exports diversified into new markets, and Free Trade Agreements provided additional support.
India's biggest strength lies in its domestic economy, with growth spurred by income tax exemptions for those earning up to Rs 12 lakh and significant GST rate cuts in September 2025. These measures increased disposable income for individuals and reduced the cost of everyday items, providing a buffer against global headwinds.
As the war unfolded in 2026, the government and the Reserve Bank of India (RBI) took measures to mitigate any adverse effects. The government diversified its energy procurement basket, securing record-high Russian crude oil supplies and increasing LPG and LNG procurement from the US. This helped maintain energy security despite global supply constraints.
In response to the oil price shock, the government initially absorbed the impact by reducing excise duties on petrol and diesel, shielding consumers from higher rates. Eventually, retail prices were raised, but the increase was less severe than in many other countries. Although crude oil imports reached a record $49.7 billion in Q1, the overall effect on merchandise trade remained limited.
Written by urgent.news from Times of India's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
