The Apr’26 volume of the EcoCapsule dissects the economic impact of the Iran War, highlighting both short term hiccups and long-term reconfigurations. The most imminent impact could be on inflation, with fuel prices already reflecting in Mar’26 CPI readings worldwide. Additionally, another bound of asset price volatility could take its toll on the Indian markets, which are gingerly approaching FY27 after FY26 which saw middling equity index performance, rising bond yields, and record FPI outflows. The avenue for fiscal correction is narrowing with strain on both the numerator and denominator of fiscal deficit. The Report concludes with a discussion on trajectory of bond yields and their drivers.
