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Informist, Wednesday, Mar. 11, 2026

 

MUMBAI – Nomura Wednesday raised India's inflation forecast for 2026-27 (Apr-Mar) to 4.5% from 3.8% amid the military conflict in West Asia. The brokerage firm also raised its estimate for India's current account deficit for FY27 to 1.6% of GDP, while reducing the forecast for India's GDP growth to 7% as the conflict in West Asia is expected to impact the industrial and services sector.

 

Indian Oil Corp. Ltd. Saturday raised prices of domestic liquefied petroleum gas cylinders by INR 60 per cylinder in the four metro cities and that of commercial 19-kg gas cylinders by INR 114.50 per cylinder. "Expectations of further price increases for LPG, transport (air and road), restaurants and accommodation, and broader spillover effects have led us to raise our FY27 inflation forecast," Nomura said. The brokerage firm said if oil prices were passed through, inflation could rise by around 50 basis points on every 10% increase in prices.

 

Nomura said that the fiscal deficit target of 4.3% of GDP for FY27 is at a risk of slippage from a potential cut to fuel taxes, and higher fuel and fertiliser subsidies. 

 

India's GDP growth stood at 7.8% on year in the December quarter due to a rise in private consumption supported by cuts in the goods and services tax, healthy fixed investment, and growth in manufacturing and key private services, Nomura said. The data, based on the new series with 2022-23 as the base year, revealed a 3-4% drop in the size of the economy, and past revisions suggest a slower post-pandemic recovery in consumption and informal sectors but faster concurrent growth, the brokerage firm said. The energy shortage due to the conflict in West Asia could disrupt industrial and services activity, the report said, giving a rationale behind the cut in estimate. "We continue to expect a cyclical recovery, due to past policy easing, structural reforms, higher wage growth and the calming of trade tensions with the US," Nomura said.

 

The elevated oil prices are expected to be factored into the Reserve Bank of India's policy decisions, according to Nomura. The Monetary Policy Committee had left the repo rate unchanged at 5.25% in February.  End

 

Reported by Nandini Sinha

Edited by Avishek Dutta

 

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