New Delhi, May 23 -- India's domestic demand continues to remain the primary engine of economic growth, but the near-term outlook has become 'somewhat clouded' due to supply-side pressures arising from the ongoing West Asia crisis, according to the latest State of the Economy report released by the Reserve Bank of India.

Published as part of the RBI's April 2026 monthly bulletin, the report noted that while headline inflation remains within the central bank's tolerance band, the transmission of global price pressures into domestic markets warrants close monitoring.

The RBI also highlighted that financial conditions, crude oil prices and capital flows continue to pose challenges to India's external sector outlook amid heightened geopolit...