Kamal Ghorui
The ongoing crisis in the Middle East has triggered ripples for economies and sectors across the globe. Even so, India’s economy still appears firm, with only a few early signs of pressure, according to a recent report by HDFC Bank’s treasury research team.The report, Macro Billboard: 40 Charts, Early Signals dated April 20, 2026, says that spending by households has not been hit much by rising energy prices yet. However, early signs of caution are visible, as consumer surveys show people are starting to feel less confident.The jobs picture is mixed. The formal job market is improving, but rural unemployment is slowly rising. The report warns that if more people move back to villages, it could push down rural wages and also lead to worker shortages in industrial areas.Manufacturing is starting to feel the impact of higher energy costs, although it was performing well earlier. The services sector, however, remains mostly unaffected for now. Some impact is seen in sea-port cargo and air passenger traffic, but other indicators like air cargo, bank activity, commercial vehicle sales and GST collections still show steady growth.The report expects the overall impact of the conflict to remain limited in the last quarter of FY26. It states, “We expect the economic impact of the war to be limited in Q4 FY26 (with the impact likely to be felt only in March and with momentum being strong in January and February) and do not see a material downside to the growth estimate of 7.3-7.4% for Q4 FY26.”It also warns of risks ahead, mainly due to supply issues. “Looking ahead, while ‘peak uncertainty’ seems to have moderated around the war for now, the continued closure of the Strait of Hormuz continues to present downside risks due to supply disruptions to the growth outlook for Q1 FY27 and beyond.”Recent data also shows that demand is still strong. Even though it has slowed after the festive season, it remains better than levels seen in 2024 and early 2025 in both rural and urban areas. GST rate cuts have supported this recovery into 2026, with March GST collections crossing Rs 2 lakh crore, up 8.8%. Vehicle sales, including two-wheelers and passenger cars, have grown by over 20%.Rural demand also looks strong, helped by higher rabi sowing, strong tractor sales growth, and lower demand for MNREGA work. Inflation remains under control at 3.4%, which is helping reduce the impact of higher energy prices on spending.Overall, while some early signs of stress are appearing, the economy remains stable for now, with risks mainly coming from possible supply disruptions in the near future.
