New Delhi: The Reserve Bank of India has raised concerns over multiple emerging risks to the economy, pointing to global conflict, climate factors, and technological disruptions as key challenges in its latest Monetary Policy Committee minutes.
The central bank cautioned that escalating tensions in West Asia could disrupt global supply chains, leading to higher costs and slower economic growth worldwide. It noted that any disturbance in vital trade routes such as the Strait of Hormuz could push up energy and commodity prices, placing pressure on domestic production in the coming financial year.
The RBI also flagged the potential impact of El Niño, which typically results in reduced monsoon rainfall in India. This could further drive inflation, especially when combined with volatile energy prices. Reflecting a cautious stance, the Monetary Policy Committee kept the repo rate unchanged at 5.5 percent, while maintaining a “wait and watch” approach.
Despite these concerns, India’s growth outlook remains relatively stable, with GDP projected at 6.9 percent for FY27, supported by strong domestic demand and continued momentum in the services and manufacturing sectors. However, inflation is expected to hover around 4.6 percent, with upside risks linked to global uncertainties and weather related disruptions.
In a separate development, the RBI is also examining potential risks posed by advanced artificial intelligence systems such as Mythos AI model developed by Anthropic. The central bank is engaging with international regulators and financial institutions to assess cybersecurity implications, particularly concerns that such systems could accelerate the discovery of software vulnerabilities.
Discussions are underway with global counterparts including the US Federal Reserve and the Bank of England. Meanwhile, the National Payments Corporation of India is exploring early access to test potential risks.
The RBI is also working on broader guidelines to regulate the use of advanced AI in banking, with a strong emphasis on data protection and compliance with India’s data localisation requirements.
