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MUMBAI: India is scrambling to salvage a sinking rupee as surging oil prices tied to the Middle East conflict threaten to disrupt the world&#39;s fastest-growing major economy. The currency has dropped more than 5% since the crisis erupted in February, extending losses from 2025 and making it Asia&#39;s worst-performing major currency in 2026 so far. It hit a record low of over 96 to the dollar on Friday, prompting officials to signal that halting further depreciation is a key macroeconomic priority. India&#39;s central bank has already poured billions of dollars to stabilize the currency, curbed speculative trading and offered a special credit line to oil importers to ease dollar demand. Prime Minister Narendra Modi has also urged voluntary austerity measures to rein in dollar-guzzling imports, including cutting down on gold buying and foreign travel for a year. But the pressure persists. &quot;The whole system has been disturbed,&quot; said Dilip Parmar of stockbroker HDFC Securities, citing heavy foreign investor outflows, weaker growth prospects and elevated crude prices. &quot;That is the basic problem which you&#39;re seeing replicated in the fall of the rupee,&quot; he said, noting that it was ultimately &quot;a function of demand and supply&quot; with dollar demand being higher. The rupee&#39;s slide comes as India faces a widening current account deficit driven by costly energy imports. The gap is likely to be over 2% of GDP this fiscal year, more than double last year&#39;s level and potentially the widest since 2012-13, according to Bank of America Securities estimates. Widening deficitAt the same time, foreign investors have dumped more than $20 billion in Indian stocks since the start of the Mideast conflict, at the fastest pace on record, while dollar inflows have slowed, opening the possibility of a balance-of-payments gap of $67-88 billion. The 2027 fiscal year &quot;will be our third year of a balance-of-payment deficit, which is certainly unusual,&quot; economist Dhiraj Nim of ANZ Research told AFP. This strain has weighed on the rupee, prompting the central bank to defend it by burning through foreign exchange reserves -- now at around $697 billion, down from over $720 billion before the Middle East war. While still covering about 11 months of imports, the decline underscores the strain. A weaker rupee is rippling through the domestic economy. Manufacturers and food processors, many of which are dependent on imported raw materials priced in dollars, are seeing costs surge. Smaller firms often cannot hedge currency risk. In Kerala&#39;s cashew industry, which mostly imports raw nuts from Africa, the impact has been acute. &quot;Imports have become far more expensive for the local market,&quot; said Rajmohan Pillai, who runs a cashew firm, adding buyers can now afford only about 90% of last year&#39;s volumes. He estimates more than 80% of processing units have shut in recent years, with rupee volatility a contributing factor. &#39;Last straw&#39;India&#39;s currency decline has also hit students looking to study abroad. Education consultants say studying in the United States now costs more than one million Indian rupees ($10,450) more than a year ago. &quot;This is the last straw,&quot; said Meghna Sen, a 17-year-old aspiring psychology student. &quot;Now we have to track (the rupee) movement to check how much we need for our grocery budgets.&quot; The depreciation has punctured India&#39;s ambition to become the world&#39;s third-largest economy. Modi, who once criticized his predecessors over currency weakness, has seen India&#39;s global economic ranking dented because GDP comparisons are measured in dollars. The country has slipped behind the United Kingdom to sixth place according to IMF data, largely due to the rupee&#39;s fall. Nomura analysts warn that more drastic measures may be on the anvil. These include possible fuel price hikes, tighter controls on overseas remittances and steps to attract dollar deposits from non-resident Indians -- a playbook used in past crises. Still, economists caution that intervention can only smooth volatility, not reverse underlying pressures. &quot;Fundamental factors&quot; remain unresolved, Nim said, adding, &quot;I would not even rule out an interest rate hike which squarely targets future inflation.&quot; The Reserve Bank of India knows what its options are, he said. &quot;All that remains is to see what it decides to choose.&quot;

India

The rupee's slide comes as India faces a widening current account deficit driven by costly energy imports.

India scrambles to steady rupee as oil shock bites

ISLAMABAD: Experts warn India may face a recession in the 2026-27 fiscal year due to increasing economic vulnerabilities.&nbsp;&nbsp;The combination of rising oil prices, heavy dependence on foreign energy imports, and external pressures has raised concerns about slowing growth and a widening current account deficit.&nbsp;Economic analyst Debanchu Moan, professor at Jindal Global University, said that India&rsquo;s macroeconomic fundamentals are under strain.&nbsp;&ldquo;Anything below 6% growth in the Indian context effectively amounts to a deep recession,&rdquo; he told The Wire during a podcast.&nbsp;&nbsp;Rising oil costs and disruptions in key trade routes have pushed the Indian rupee past 95 to the US dollar, with some forecasts suggesting it could reach 100 in the coming weeks.&nbsp;Experts point to the ongoing tensions in the US-Israel-Iran conflict as an indirect factor exacerbating India&rsquo;s economic challenges. Oil supply disruptions, blocked shipping lanes, and inflationary pressures are weighing heavily on India&rsquo;s balance of payments.&nbsp;&nbsp;&ldquo;India&rsquo;s dependence on oil imports from West Asia and its limited strategic petroleum reserves leave it particularly vulnerable,&rdquo; Moan added.&nbsp;The economist also highlighted policy missteps, noting that previous favorable deals, such as discounted oil imports from Iran, were discontinued under US pressure, costing India billions of dollars annually.&nbsp;&nbsp;Additionally, commitments to increase trade with the US while reducing imports from Russia have shifted India&rsquo;s energy dependence in ways that may prove unsustainable.&nbsp;&ldquo;India has a 30-day window to stabilize its balance of payments and implement effective course corrections,&rdquo; Moan said.&nbsp;&nbsp;&ldquo;Without strategic planning and a clear multi-aligned foreign policy, the country risks worsening macroeconomic pressures, including inflation, trade imbalances, and slowing GDP growth.&rdquo;&nbsp;The government has been urged to manage capital flows carefully, maintain a strategic reserve buffer, and reassess its energy import strategy to avoid a deeper economic crisis.&nbsp;

Deepanchu Moan, economics professor at Jindal Global University, says India’s reliance on imported oil and gas, particularly from West Asia, leaves the country vulnerable to global supply shocks.

India may slip into recession in 2026-27, economist warns

ISLAMABAD: A majority of Pakistanis are entering 2026 with significantly higher expectations for economic prosperity and global peace than their neighbors in India, defying global trends of pessimism, according to a new survey. The &ldquo;End of Year Survey&rdquo; by the Gallup International Association highlights a distinct divergence in South Asian sentiment. While India records higher levels of general hope for the new year, Pakistan has outperformed its eastern neighbor on specific measures of economic confidence and expectations for a more peaceful world. Economic outlook On the specific question of economic prosperity, Pakistan has emerged as a regional outlier. The poll found that 53% of Pakistani respondents believe 2026 will be a year of economic prosperity, compared with just 39% in India. This confidence is particularly striking when viewed against the global backdrop. The world average for economic optimism sits at just 24%, meaning Pakistan&rsquo;s positive sentiment is more than double the international norm. <img src="https://paktv-assets-7d41fab8.s3.eu-west-2.amazonaws.com/uploads/f2a731dd-9f22-43c9-9612-7ab420f1a973-1.png" alt="1.png" class="fr-dib fr-fil"><figcaption class="caption-cover-image text-sm text-gray-600 italic" style="line-height: 2;">Source: Gallup International End of Year Survey 2026</figcaption> The contrast deepens when looking at the overall balance of opinion. Instead of just counting the optimists, the survey calculates a &quot;net score&quot; by subtracting the pessimists. In Pakistan, the hopeful outnumber the fearful by a solid margin of 26 percentage points. In comparison, India&rsquo;s lead is much slimmer, with optimists exceeding pessimists by only 13 points. &quot;Overall, the findings indicate that economic sentiment in Pakistan is notably stronger than both the global average and India, despite widespread global economic pessimism,&quot; the report noted. Hope for peace Pakistan&rsquo;s lead is even more pronounced regarding global stability. According to the data, 52% of Pakistanis expect the world to be more peaceful in 2026. In sharp contrast, only 26% of respondents in India share this view, a figure that aligns with the low global average.<img src="https://paktv-assets-7d41fab8.s3.eu-west-2.amazonaws.com/uploads/53d2c3d6-227f-4671-85dd-dad3f3256dfd-2.png" alt="2.png" class="fr-dib fr-fil"><figcaption class="caption-cover-image text-sm text-gray-600 italic" style="line-height: 2;">Source: Gallup International End of Year Survey 2026</figcaption> The divide is starkest when weighing hope against fear. While Pakistan remains firmly in positive territory (+31%), India actually slides into the negative. There, the pessimists outnumber the optimists by 9 points, meaning more Indians expect the world to become &quot;more troubled&quot; than &quot;more peaceful.&quot; General hope While Pakistan leads on specific economic and peace metrics, the survey indicates that India holds a stronger sense of general hope for the year ahead. When asked simply if 2026 will be generally &quot;better&quot; than 2025, 59% of respondents in India said yes, compared to 51% in Pakistan. However, the report noted that Pakistan&rsquo;s outlook remains resilient; its 51% optimism rate places it well above the global average of 37%. Drivers of optimism The surge in Pakistani optimism appears to be primarily driven by younger demographics. The report details that optimism is concentrated among those aged 18-34, while older age groups expressed more caution regarding the coming year. This year&#39;s figures represent a significant rebound in public sentiment. The report describes the current optimism as one of the highest recorded since tracking began in 1994, comparable only to peaks seen in the late 1990s and mid-2010s. Methodology The findings for Pakistan are based on a sample of 1,000 respondents interviewed via Random Digit Dialling across all four provinces by Gallup Pakistan, an affiliate of the Gallup International Association. Globally, the survey interviewed 59,636 people across 60 countries.

Economy

Defying global pessimism, Pakistan outpaces India in economic and peace optimism for 2026, marking a significant rebound in national confidence.

Pakistan outpaces India in economic and peace optimism for 2026: Global survey

ISLAMABAD: The International Monetary Fund (IMF) has assigned India a &#39;C&#39; grade for its national accounts and government finance data in its 2025 Data Adequacy Assessment, marking the second consecutive year the country has received this rating.&nbsp; The grade indicates that India&#39;s economic statistics contain shortcomings that hamper effective surveillance and analysis. What does a &#39;C&#39; grade mean?The &#39;C&#39; rating signifies that the data provided to the IMF &quot;have some shortcomings that somewhat hamper surveillance.&quot;&nbsp; The rating places India below the &#39;A&#39; (adequate) and &#39;B&#39; (broadly adequate) categories, suggesting that persistent issues make it challenging for economists, investors, and policymakers to obtain a completely accurate and timely picture of the Indian economy. The report cites several reasons for the rating, including the use of an outdated base year, flawed deflation calculation methods, and a lack of government finance statistics. &#39;Numbers remain disappointing&#39; The report has attracted opposition criticism from the Bharatiya Janata Party (BJP)-led Indian government.&nbsp; Congress leader Jairam Ramesh, the party&#39;s general secretary in charge of communications, wrote on X that &ldquo;the economic numbers remain disappointing.&rdquo;<div class="fr-embed"><div class="twitter-tweet twitter-tweet-rendered" style="display: flex; max-width: 550px; width: 100%; margin-top: 10px; margin-bottom: 10px;"><iframe id="twitter-widget-0" scrolling="no" frameborder="0" allowfullscreen="true" title="X Post" src="https://platform.twitter.com/embed/Tweet.html?dnt=false&embedId=twitter-widget-0&features=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%3D%3D&frame=false&hideCard=false&hideThread=false&id=1994368354296222134&lang=en&origin=https%3A%2F%2Fmain.d1wrm1qseko1cp.amplifyapp.com%2Farticles%2F&sessionId=6bc66bbe3b23caf8095de451d9a26e689bb3eb87&theme=light&widgetsVersion=2615f7e52b7e0%3A1702314776716&width=550px" style="position: static; visibility: visible; width: 550px; height: 897px; display: block; flex-grow: 1;">&nbsp;</iframe></div></div>The government is understating inflation to make GDP growth appear better, he said. &#39;Huge concern&#39; Opposition politicians are not the only ones calling out the government for the &#39;C&#39; grade report.&nbsp; Writing for The Wire, economist Arun Kumar, a former professor at Jawaharlal Nehru University, New Delhi, called the C-grade rating a &quot;huge concern,&quot; noting that GDP data have been in disrepute since the 2011-12 series was introduced.&nbsp; Both Kumar and Pronab Sen, India&#39;s former chief statistician, said India&#39;s GDP is &quot;less than reliable,&quot; with problems arising from how India estimates the unorganized sector, according to The Wire. On the other hand, BJP leader Meenakashi Lekhi, quoted by The Print, dismissed the opposition&#39;s focus on the C-grade as &quot;cherry-picking&quot; and spinning a narrative to destabilize India. The opposition&#39;s use of the IMF rating, he said, appears to be part of a broader critique of the government&#39;s credibility in its economic data and statistical methodology.

The rating places India below the 'A' (adequate) and 'B' (broadly adequate) categories, suggesting that persistent issues make it challenging for economists, investors, and policymakers to obtain a completely accurate and timely picture of the Indian economy.

Articles tagged with "Indian economy"

India scrambles to steady rupee as oil shock bites

India may slip into recession in 2026-27, economist warns

Pakistan outpaces India in economic and peace optimism for 2026: Global survey

IMF gives India 'C' grade on economic data quality