Oil prices key external risk, but yet to derail growth outlook: Radhika Rao, Executive Director & Senior Economist, DBS Bank

Oil prices and disruptions to energy transit routes have emerged as the primary external risks for India's economy, but they have not yet significantly undermined the growth outlook. Despite the challenges, India's strategy of diversifying crude sourcing and securing alternative supplies have proven instrumental in maintaining growth momentum.

The central bank's record foreign reserves have given policymakers a substantial cushion against forex volatility, commodity price shocks, and fluctuations in global risk sentiments. Consequently, the economy seems to be entering a phase of increased uncertainty, yet policymakers are enjoying a higher degree of policy flexibility compared to previous cycles.

As the economy moves forward, the focus will shift towards managing liquidity, gradually reducing the sizable forwards book, and supporting the domestic currency. Long-term yields are expected to be influenced by the hardening global yields. Inflation is anticipated to stabilize at a higher level after two years of low rates. While the overall growth forecast for this year remains at 7.3% year-on-year, the pace of growth might decelerate in the second half of the year.