The Organization of the Petroleum Exporting Countries (OPEC) reported that recent data from the second quarter of 2026 shows the Indian economy is generally strong. Key indicators of consumption are stable, unemployment rates are similar, industrial production is growing, and non-food credit has increased, with the services sector boosting the economy. However, geopolitical tensions have raised external risks related to energy imports and currency stability. The Indian rupee has weakened significantly against the dollar due to high energy costs, increasing inflation risks. Rising food and core inflation is expected due to a weak monsoon and other cost pressures, although falling precious metals prices have somewhat countered this.

OPEC highlighted that India’s short-term outlook is still positive due to strong services, steady investment, and robust industrial activity, with significant growth in industrial production and capital goods in June. However, external conditions are becoming less favorable. Rising energy prices in July have renewed fears of further inflation and added pressure on government finances, slowing fiscal consolidation temporarily.

OPEC pointed out that the monsoon poses the biggest domestic risk. After a slow start, rainfall improved, but the El Niño phenomenon threatens crops, rural incomes, and food prices. Low reservoir storage levels could impact irrigation and rural demand if further rainfall is deficient.