By Aditya Agarwal 
RBI sees resilience, but external risks are rising
India’s economy is entering the final stretch of 2026 with domestic activity holding up despite a more difficult global environment.
In its latest assessment, the Reserve Bank of India said economic activity remained resilient through August. The central bank also pointed to strong first-quarter GDP growth and sustained demand across several high-frequency indicators. (The Times of India)
However, the external environment has become more complicated.
The escalation of conflict in West Asia has pushed oil prices higher. Therefore, the cost of energy has again become an important risk for India.
India remains heavily dependent on imported crude oil. Consequently, a prolonged increase in energy prices can affect inflation, transport costs, corporate margins and household spending.
The RBI said geopolitical tensions and weather-related uncertainty remain important downside risks.
At the same time, the central bank’s assessment was not uniformly negative. It highlighted resilience across parts of industry and services.
That balance is important for businesses.
Domestic demand remains a key support
The RBI said high-frequency indicators remained broadly healthy in August.
Domestic demand therefore continues to provide an important cushion against external volatility.
For companies, strong domestic consumption can reduce dependence on export markets. It can also help businesses absorb temporary disruptions in international trade.
The banking system is another important part of this picture.
The RBI reported that bank deposits grew at their fastest pace in 15 years during August. Meanwhile, credit growth continued, with industrial credit showing acceleration. (The Times of India)
This combination gives companies greater access to formal financing.
However, abundant liquidity also creates a policy challenge. Excess liquidity can influence market rates and complicate the transmission of monetary policy.
The RBI has already been taking steps to manage liquidity in the banking system. Reuters reported earlier this week that the central bank had reduced the banking system’s liquidity surplus substantially through bond sales and foreign-exchange operations. (Reuters)
Foreign investment provides another positive signal
India’s external investment numbers also offer a constructive indicator.
According to the latest RBI data cited by the Times of India, net foreign direct investment reached $7.3 billion in July. That represented a 64% increase from the previous month.
Gross inflows stood at $14.6 billion, more than 31% higher than a year earlier.
Communication, financial services and computer services accounted for more than four-fifths of equity inflows.
Mauritius, the UAE and the United States were the largest source countries, together accounting for about 70% of equity inflows. (The Times of India)
Between April and July, net FDI reached $13.4 billion.
Gross FDI during that period rose 12.6% to $43.9 billion.
These figures matter because foreign capital can support expansion, technology investment and employment.
Nevertheless, FDI does not remove India’s exposure to global shocks.
Oil remains the immediate pressure point
The biggest short-term uncertainty is energy.
Higher crude prices can feed into transportation, manufacturing and logistics costs. They can also influence inflation through fuel and other input prices.
India has already been adjusting its crude sourcing.
Reuters reported that India’s Russian oil imports fell 16.5% in August to around 2.1 million barrels per day. Preliminary September data indicated another decline. At the same time, imports from other suppliers, including Iraq and Gulf producers, have changed. (Reuters)
That diversification can improve flexibility.
However, global oil prices remain outside India’s direct control.
Therefore, businesses are likely to remain sensitive to energy costs, currency movements and global supply disruptions.
What businesses should watch next
The current picture is more nuanced than a simple growth-versus-slowdown narrative.
India enters the period with strong domestic demand, expanding credit and significant foreign investment.
At the same time, oil prices, geopolitical tensions and global financial conditions create meaningful risks.
For corporate India, the next phase will therefore depend on how effectively companies manage input costs while maintaining investment.
For investors and business leaders, the key indicators will include crude prices, inflation, credit growth, FDI, the rupee and industrial activity.
The RBI’s latest assessment suggests that India’s domestic economy has buffers.
However, those buffers are being tested by an increasingly uncertain external environment.
Tags: India economy, RBI, Indian business, FDI India, oil prices, GDP, business news, Indian economy
Flairius CTA: Follow Flairius News — sharp takes on AI, business, and India’s startup economy — flairiusnews.com