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Informist, Tuesday, Jun. 23, 2026

 

--S&P Global:See fiscal strain on energy shock, no impact on India credit rtg

 

NEW DELHI – The disruption in energy supply will put strain on India's fiscal position, but it is unlikely to affect the sovereign credit rating, Geeta Chugh, managing director, sector lead financial institutions rating at S&P Global, said Tuesday. "India has discontinued most fuel subsidies, but pump prices adjusted with a lag due to adjustments by oil marketing companies and government cutting excise duties," she said.

 

Currently, India is rated BBB by the global credit rating agency. The high energy price is translating into a wider current account deficit, increased consumer prices, and higher costs for producers in India. 

 

Chugh said the government's revenue base could be weakened if excise duty cuts become structural. To mitigate the impact of the West Asia war, the government has cut excise duty on petrol to INR 3 per litre from INR 13 per litre and on diesel to zero from INR 10 per litre to help oil marketing companies absorb the rise in crude oil prices. The government's total revenue loss could be over INR 1.60 trillion.

 

Chugh also said that the energy supply constraints may impact India's growth by 80 basis points. In May, the rating agency had projected India's GDP growth slowing down to 6.6% in the current financial year from 7.6% in FY26.

 

"Corporates, refining, chemicals, airlines, significant impact, but overall manageable. Likewise, impact for banks is manageable. So, that's really how we are seeing the impact on India," Chugh said.  End

 

Reported by Sagar Sen and Afra Abubacker

Edited by Avishek Dutta

 

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