According to the latest edition of the Monthly Economic Review, prepared by Economic Affairs Department of the Finance Ministry, remittance inflows remained robust, with personal transfer receipts rising to $36.9 billion in Q3 (October-December) of FY 26, compared to $35.1 billion in the same period of FY25. However, the outlook for remittances remains sensitive to crude oil price movements.
“Given that Gulf Cooperation Council (GCC) economies accounted for about 38 per cent of India’s total remittances in 2023-24 and host nearly half of Indian migrants worldwide, any sustained rise in crude oil prices could weigh on fiscal conditions in these economies and, in turn, moderate remittance growth in the near term,” it said.
Data from the External Affairs Ministry showed that an estimated 9.2 million Indians live and work in West Asia, with the largest concentration in the United Arab Emirates, where the Indian diaspora is estimated to be close to four million. According to RBI estimates, at least 35 per cent of India’s annual remittances originate from West Asia. “This implies that India’s exposure to remittances from the region is around $40 billion annually. These factors, alongside portfolio capital outflows, have contributed to depreciation pressures on the Indian Rupee, necessitating calibrated policy responses,” it said.
Apart from remittances, higher petroleum import bills, combined with increased logistics costs and reduced exports to the Middle East, could exert pressure on the current account. Elevated global crude oil prices also pose risks to the merchandise trade balance, while the outlook for remittances also remains sensitive as the Gulf Cooperation Council economies accounted for nearly half of India’s migrants worldwide, the report added.
Inflation
Meanwhile, the report also highlighted upside risks to March print, even as the present agricultural supply conditions remain favourable. Indicating strong production prospects, the wheat acreage in Rabi 2026 has increased to 334.17 lakh hectares, and the pulses cultivation area in the summer season expanded by 0.51 lakh hectares. The area under summer cultivation of edible oil, however, declined marginally. The current stock position of rice (including paddy) is 12 times the buffer norm, and that of wheat is nearly double the buffer norm for January 01, 2026.
“The oil price shock poses an unexpected upside risk for inflation in the medium term. Supply disruptions and higher input costs are being transmitted into domestic prices, particularly in fuel-intensive sectors,” the report said. At the same time, selective price corrections in perishables—due to export disruptions—reflect localised demand-supply imbalances. If oil and gas prices remain high, they may spill over into other sectors through higher input prices. However, “the Government is closely monitoring the situation and has been taking several measures to ensure adequate domestic energy availability and cushion any adverse effects,” it said.
Retail inflation based on consumer price index rose to 3.21 per cent in February as against 2.74 per cent of January mainly on account of higher food prices.
Published on March 29, 2026