The Finance Ministry has flagged surging oil prices and rupee pressure as key risks to India’s economy in its September Monthly Economic Review, released Thursday.

India’s average imported crude basket price surged to $116.04 a barrel in September, the highest monthly level since the US-Iran conflict began in February, up 28.66 per cent from $90.19 in August. The ministry cautioned that while growth momentum is strong, “global conditions have turned unfavourable again.”

The review noted that foreign investors pulled $3.7 billion from Indian equities and bonds in September, and Brent crude climbed above $107 a barrel amid Middle East supply disruptions.

On the domestic front, manufacturing activity growth touched a seven-month high in September on accelerating new orders and output. But the ministry warned that competition for capital flows and the “weaponisation” of supply chains pose stiff challenges for developing nations.

The review highlighted that oil prices spiked in September while India’s bond yields rose less than global peers, compressing the risk premium on Indian debt and weighing on the rupee. “India, as do other developing nations, faces a stiff challenge to attract capital flows,” the ministry said. It also flagged competition from developed economies seeking manufacturing investment.