As Inflation Rises and the Rupee Falls, Dire Predictions About the Indian Economy; With Support From ADMK Rebel Faction, Vijay’s TVK Wins Floor Test; What Next for the INDIA Alliance?
Leader of Opposition Not a Rubber Stamp, Says Rahul Gandhi; Air India Cuts Back on Several International Routes; After Backlash, Vijay’s Govt Revokes Official Appointment of His Astrologer
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Snapshot of the day
May 13, 2026
Sidharth Bhatia
India could face a 17% hit to its GDP by 2050 under a scenario of complete global trade fragmentation, significantly higher than the estimated 3% loss for the United States, according to economist Robert Koopman, former chief economist at the World Trade Organisation (WTO). Speaking at the CII Annual Business Summit 2026 organised by the Confederation of Indian Industry (CII), he warned that India would be among the most adversely affected major economies if the world shifts further away from global integration toward protectionist, fragmented trade blocs.
“I did a piece looking at what fragmentation might mean for the global economy… India was badly hurt in that scenario,” Koopman said. “India was hurt by about 17% in 2050 compared to what their GDP would be otherwise, if we went to complete fragmentation versus continued integration and liberalisation.”
He attributed the disparity to structural supply-chain exposure, particularly India’s continued reliance on imported inputs from China. “India is very dependent on Chinese parts and components that underpin digital services exports and telecom exports,” he noted.
That macroeconomic vulnerability is now colliding with immediate global shocks. Kotak Mahindra Bank chairperson Uday Kotak warned that households have not yet absorbed the real impact of the conflict in West Asia on fuel costs. “The shock is coming and it’s coming big,” he said, cautioning that consumers will soon feel pressure both directly at the pump and indirectly through higher prices across fuel-linked goods and services. “Consumers have not felt the pressure at all so far. A person with limited income will soon have to spend more directly on fuel and indirectly on everything dependent on fuel,” he said.
Meanwhile, the rupee – already weak – slid to its lowest-ever intraday of 95.80 against the US dollar on Wednesday, marking its fourth straight session of losses. The fall has been driven by surging crude oil prices and rising fears of prolonged global trade disruption linked to the ongoing crisis in West Asia. This comes despite repeated interventions by the central bank, with forex analysts suggesting that recent policy steps, including the Modi government’s decision to raise import duties on gold and silver from 6% to 15%, may do little to meaningfully curb demand for the dollar.
At the same time, inflationary pressures are beginning to feed through the domestic economy. Retail inflation has risen to a 13-month high of 3.5% in April 2026, mostly due to increased food inflation as restaurants hiked prices owing to the rise of fuel prices, reports The Hindu. According to data on the Consumer Price Index (CPI) for April, inflation in April rose from the 3.4% registered in March. While inflation in the food and beverages category rose to 4% in April from 3.7% in March, inflation in the restaurant and accommodation services sector also registered a sharp increase to 4.2% in April from 2.9% in March 2026.
Separately, India, the world’s largest importer of diammonium phosphate (DAP), has
