India, according to Assocham, is in a favorable position to handle retail inflation compared to other major economies. The country’s inflation rate was 3.2% in February 2026 and increased to 3.5% in April, showing a 0.3 percentage-point rise. This performance surpasses that of the US, where inflation surged from 2.4% in February to 3.8% in April, a 1.4 percentage-point jump.
India’s inflation trajectory also outperformed that of France, Italy, and Germany, with these countries experiencing over a 1 percentage point increase in inflation between February and April. India’s inflation management is superior to that of Brazil as well. Assocham President Nirmal K Minda recommended the RBI to maintain the current repo rate status in the upcoming monetary policy review in early June 2026.
While acknowledging the possibility of some inflation uptick due to recent energy price hikes, Minda believes it will be temporary and expects inflation to revert to favorable levels. Assocham commended the Central Bank’s move to conduct a $5 billion USD/INR buy-sell swap auction on May 26 to infuse long-term liquidity and bolster forex reserves, aiding in managing liquidity and stabilizing the rupee amidst global challenges.
The industry body proposed an ‘On-Tap LTRO’ scheme to offer Rs 1 lakh crore liquidity support at the Repo Rate to banks and NBFCs for lending to export-oriented and energy-related MSMEs, facilitating easier access to credit and business continuity. Assocham also suggested an interest subvention to lower borrowing costs for MSMEs focused on exports to the MENA and EU regions, advocating a 2% interest subsidy on working capital loans up to Rs 5 crore for eligible units.
Moreover, Assocham recommended that RBI consider a six-month loan moratorium or interest support for energy-intensive MSMEs to help them cope with escalating costs and maintain financial stability.
