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Informist, Wednesday, Apr. 29, 2026

 

NEW DELHI – India's GDP growth may fall to around 6%, while retail inflation may rise to 6% in 2026-27 (Apr-Mar), if the Indian crude basket price averages $120 per barrel because of the West Asia war, EY India said in a report on Wednesday. "Current indications suggest that the West Asian crisis may last well beyond expectations of a short-lived conflict. Even after it is resolved, considerable time would be required for the global crude supply situation to normalise," the report said. 

The GDP growth projection is lower than the RBI's estimate of 6.9% for FY27.

 

"India's growth may be lower than 6.5% and inflation somewhat higher than Reserve Bank of India's baseline projections. There is a likelihood of the Indian crude basket price exceeding $95 per barrel on average in FY27. Even so, India's growth in FY27 is expected to be more than double that of global growth under an adverse scenario," the report authored by EY India Chief Policy Advisor D.K. Srivastava said.

 

The report said that there is limited room for policy interventions, however, hiking repo rate and accelerated crude supply source diversification should be considered. "To minimise the adverse impact on fiscal deficit, increased energy prices should be passed on to the retailers to a relatively larger extent," it said.

 

 

Domestic market analysts have said that higher crude oil prices and continued blockade of the Strait of Hormuz, despite the cessation of hostilities in the region, may force the government to raise retail prices of petrol and diesel. The government has, however, repeatedly said that it was not considering any proposal at the current juncture to raise the retail prices of petrol and diesel.

 

India faces one of the worst energy crises in decades because of the war in West Asia. Given its dependence on countries in the Persian Gulf region for crude oil, liquefied petroleum gas, and liquefied natural gas supplies India has been exposed to energy supply and price shocks. Price of crude oil have surged as high as $120 per barrel from $70 per barrel before the war. Although prices have cooled from the over $115 per barrel range, it is still higher than the pre-war period.

 

Srivastava highlighted that the government has already provided additional subsidies to the oil marketing companies. "The losses of oil marketing companies are likely to depend on the extent to which the government insists on keeping retail prices at present levels," the report said.

 

 

EY in its report said that the reduction in excise duty on petrol and diesel may reduce losses for oil marketing companies, but that reduction may result in direct revenue losses. "FY27 budget estimates may need to be revised on account of the expected increase in government subsidies related to food, fertiliser and petroleum due to the higher Indian crude basket price and the government's objective of curtailing the pass-through of the increase in Indian crude basket prices to consumers," the report said.  End

 

US$1 = INR 94.84

 

Reported by Sagar Sen

Edited by Akul Nishant Akhoury

 

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