New Delhi, May 22, 2026: ASSOCHAM suggests the RBI to maintain the repo rate status quo while introducing liquidity, interest subvention, and moratorium support measures for export-oriented and energy-intensive MSMEs in the forthcoming review of monetary policy in 1st week of June 2026.
India is better placed to manage retail inflation among the top 10 economies, according to an analysis by the industry body ASSOCHAM during the turbulent period triggered by the war in West Asia.
India’s inflation stood at 3.2% in February 2026 and rose to 3.5% in April 2026, a 0.3 percentage-point increase. This performance is better than the significant increase in the US, where inflation rose from 2.4% in February 2026 to 3.8% in April 2026, a 1.4 percentage-point increase, according to the industry body ASSOCHAM.
As India’s headline inflation still prevails in the benign conditions, we suggest RBI to maintain a status quo on repo rate in the forthcoming review of RBI monetary policy in the 1st week of June 2026, said Mr Nirmal K Minda, President, ASSOCHAM
Though some increase in headline inflation can’t be ruled out, given the recent rise in energy prices, it will be a transitory phase in the inflation trajectory, and we are hopeful that inflation will return to benign territory. At this juncture, any increase in the repo rate will have a significant impact on business sentiment and the country’s demand trajectory, said Mr Nirmal K Minda, ASSOCHAM President.
We appreciate the Central Bank’s decision to conduct a USD 5 billion USD/INR buy-sell swap auction on 26 May 2026 to inject long-term liquidity into the banking system and strengthen forex reserves, said Mr Minda.
This will help manage liquidity conditions and stabilise rupee volatility amid global pressures and recent currency depreciation driven by geopolitical tensions and oil price shocks, he said.
Going ahead, ASSOCHAM proposes an On-Tap LTRO scheme to provide Rs 1 lakh crore in liquidity support at the Repo Rate to banks and NBFCs for lending to export-oriented and energy-related MSMEs. It will primarily support working capital loans of up to Rs 10 crore, thereby ensuring easier access to credit and business continuity.
ASSOCHAM proposes an interest subvention to reduce borrowing costs for MSMEs reliant on exports to the MENA and EU regions. Under the scheme, eligible units should be provided a 2% interest subsidy on working capital loans of up to Rs 5 crore.
Additionally, RBI may consider a six-month loan moratorium or interest support for energy-intensive MSMEs, helping businesses manage rising costs and maintain financial stability, said the industry body ASSOCHAM
Whie appreciation the retail inflation trajectory, Mr Minda said that India also performed significantly better than the inflation trajectory of France, Italy and Germany, where inflation increased by more than 1 percentage point in their respective inflation numbers between February and April 2026
India is also better placed than Brazil in managing inflation, as Brazil’s inflation rose by 0.6 percentage points, from 3.8% in February 2026 to 4.4% in April 2026, according to the ASSOCHAM analysis.
Among the top 10 economies, countries such as China, the UK, and Russia have performed particularly well, as their inflation trajectory improved over the past two months, mitigating the overall impact of the war in West Asia on their respective inflation trajectories.
India’s Retail Inflation Performance Compared with Major Global Economies
|
Sr. No |
Countries |
Feb |
Mar |
Apr |
Difference (Feb-April) Percentage points |
|
1 |
U.S |
2.4% |
3.3% |
3.8% |
+1.4% |
|
2 |
China |
1.3% |
1.0% |
1.2% |
– 0.1% |
|
3 |
Germany |
1.9% |
2.7% |
2.9% |
+1.0% |
|
4 |
Japan |
1.3% |
1.5% |
1.4% |
+0.1% |
|
5 |
U.K |
3.0% |
3.3% |
2.8% |
– 0.2% |
|
6 |
India |
3.2% |
3.4% |
3.5% |
+ 0.3% |
|
7 |
France |
0.9% |
1.7% |
2.2% |
+ 1.3% |
|
8 |
Italy |
1.5% |
1.7% |
2.7% |
+ 1.2% |
|
9 |
Russia |
5.9% |
5.9% |
5.6% |
– 0.3% |
|
10 |
Brazil |
3.8% |
4.1% |
4.4% |
+ 0.6% |
Source: ASSOCHAM Global Research, compiled from various sources