Amid the rising uncertainty over resources post PM Modi's speech, calling for austerity, the Reserve Bank of India Governor Sanjay Malhotra said that if the West Asia turmoil continues, India would have to raise retail petroleum prices, a Bloomberg report claimed. This comes after PM Modi's call for voluntary austerity to protect foreign exchange reserves, which included reducing the usage of gas and diesel and delaying the purchase of gold. This comes after Tuesday's decision by the Centre to raise customs duty on gold, doubling it in the process. Malhotra was speaking at a conference hosted by the Swiss National Bank and the International Monetary Fund in Switzerland on Tuesday.
Even as the government absorbed rising petroleum prices, India's inflation rate rose from 3.40% in March to 3.48% in April. However, risks remain as rising energy prices from the Middle East conflict weigh on the outlook. India is starting to experience supply-chain problems in the region. This fiscal year, the RBI predicts growth of 6.9% while inflation averages 4.6%. However, economists anticipate that the conflict will cause inflation to increase and the economy to further decelerate. In April, the RBI maintained its key policy repurchase rate at 5.25%.