Sustained crude prices around $100 a barrel could emerge as the biggest risk to India’s otherwise favourable economic outlook, potentially forcing the Reserve Bank of India to make a difficult call on the rupee and the country’s balance of payments, Neelkanth Mishra said in an exclusive interview with Moneycontrol.
Mishra said India’s fundamentals currently remain strong, with solid corporate profit growth, robust momentum in GDP growth and a stabilisation in the currency market. But a prolonged period of elevated oil prices could change that equation.
“If the new reality is that oil prices are going to average $100, then the balance of payments needs to be adjusted,” Mishra said. “That’s a hard call.”
The key question for the RBI, he said, will be where it wants the rupee to settle. At around the 94-95 level, Mishra said he suspected the central bank would not want to allow the currency to appreciate significantly.
Mishra expects some of the extraordinary dollar demand seen between October 2025 and March 2026 to reverse. During that period, India recorded an accrual-basis balance of payments deficit of $18 billion, but the RBI intervened by as much as $75 billion, implying roughly $57 billion of additional dollar demand.