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Informist, Wednesday, Mar. 18, 2026

 

NEW DELHI – Crude oil prices of up to $90 per barrel will have an "almost insignificant" macroeconomic impact on the Indian economy, Chief Economic Adviser V. Anantha Nageswaran told the Parliamentary Standing Committee on Finance on Mar. 2. The CEA's response was seen in the standing committee's report on the Demands for Grants for 2026-27 (Apr-Mar) of the Ministry of Finance presented in Parliament on Tuesday.

 

If crude oil prices go up to $90 per barrel, the GDP growth for FY27 will be around 7.0–7.4%, inflation will stay around 2.0%, India's current account deficit will be 1.0–1.2%, and fiscal deficit of 4.3-4.4% of GDP will be feasible, Nageswaran told the panel. "Therefore, up to $90 (of crude oil price), the macroeconomic impact is almost insignificant or not relevant."

 

The price of Brent crude has surged 35% to $102 per barrel since the CEA's response to the panel on Mar. 2. Prices have been on the rise in the aftermath of the US and Israel launching a joint attack on Iran on Feb. 28. The conflict in West Asia is currently in its third week.

 

If the shock is short-lived and temporary, then even if crude oil prices escalate to $130, it will not matter, the CEA said. But if crude oil prices stay at $130 per barrel for 2–3 quarters, India's economic growth will fall to 6.4% from the expected high of 7.4%, inflation will rise to 5.5%, CAD will expand to 3.2%, and the fiscal deficit will increase to 5.6% of GDP, Nagwesawran added,

 

Once the current geopolitical situation in the Persian Gulf stabilises, long-term developments like the suspension of US tariffs and India's trade deal with the European Union augur well for both India's exports and capital inflows, and this will also ease the pressure on the rupee in FY27, the CEA said. The rupee has depreciated 1.6% against the dollar since the conflict broke out in West Asia. 

 

Commenting on the size of the economy, the CEA said India will become the fourth-largest economy by FY28. "Being able to overtake Germany and to become the third-largest economy, at the moment, given the current trends of India's real GDP growth, which we expect to be at least 7% and possibly 10-11% in nominal terms, if capital flows recover and India's macroeconomic stability is well recognised by investors, both direct and portfolio, it is plausible that by the end of the decade, we will be positioned to become the third-largest economy in dollar terms," Nageswaran said.  End

 

US$1 = INR 92.42

 

Reported by Krity Ambey

Edited by Tanima Banerjee

 

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