India may be forced to raise prices for petrol and diesel if the West Asia conflict continues, RBI Governor Sanjay Malhotra said. He added that this was due to soaring cost of crude oil in the global market.
Malhotra said the rising energy prices due to the ongoing Iran war were testing India’s flexible inflation targeting. This necessitates potential policy intervention by the central bank.
Notably, the RBI’s next monetary policy meeting is scheduled for June 5, when it is expected to take a call regarding key interest rates that were left untouched to promote economic growth.
The RBI Governor has indicated that raising retail fuel prices is “a matter of time” if the West Asia crisis persists. It will ultimately lead to an increase in transportation costs and inflation.
Earlier, the Monetary Policy Committee of the RBI had in its April 2026 meeting decided to keep the repo rate unchanged at 5.25 per cent, maintaining a neutral stance. This reflects a “wait and watch” strategy to balance strong domestic growth, besides keeping an eye on inflation amid global uncertainties.
“We are being more and more data dependent. The RBI is being flexible in its approach and is ready to look through the shock if it is transitory, but if it is entrenched, we need to take action,” IANS quoted Malhotra as saying at a conference hosted by the Swiss National Bank and the International Monetary Fund in Switzerland on Tuesday.
This comes after Petroleum Minister Hardeep Singh Puri said that stocks for petrol, diesel and LPG are adequate in the country, but hinted that their prices might go up due to the heavy losses that public sector oil companies were piling up.
Puri asserted that state-run oil marketing companies were incurring losses of nearly ₹1,000 crore per day because fuel prices have not been increased, despite sharp rise in the cost of crude oil in the international market that have crossed the $100 per barrel mark.
India imports about 88 per cent of its crude oil requirement. This means that an increase in global prices leads to a sharp rise in the cost of production of petrol, diesel and LPG.