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Informist, Wednesday, Sept. 30, 2026

 

--CEA: Markets imparting great uncertainty, volatility as we go into 2027 

--CEA: Sept has been a difficult month given rise in oil prices 

--CEA: Looking at challenging environment in Oct-Mar 

--CEA: External sector becoming more and more challenging every month 

--CEA: Downside risks to global growth have increased 

--CEA: India needs to diversify energy sources

 

NEW DELHI – The second half of 2026-27 (Apr-Mar) will be challenging owing to volatile global crude oil prices, Chief Economic Advisor Anantha V. Nageswaran said Wednesday. While economic data from July to August suggests growth of 7.3%, September was a difficult month due to oil prices, he added. 

 

"...September has been a difficult month with the rising oil price, and based on July-August data, we are looking at something like 7.3%," he said at an event in New Delhi. "So it's (Apr-Jun GDP print) is not sort of something that came out of thin air, 7.8%."

 

India posted higher-than-expected GDP growth of 7.8% in the June quarter. However, there was heavy debate by critics and opposition leaders after the release of the data, demanding greater transparency and methodological clarity. While Nageswaran said the Apr-Jun GDP growth print was credible, he added that the adoption of the double deflation method might have helped it by 30-40 basis points.

 

"To some extent one might say that 30-40 bps of it came from the new technique of double deflation method etc. because import prices went up too much," he said. Double deflation is adopted for the manufacturing sector in the new GDP series against the previous practice of single deflation. Under double deflation, outputs and inputs are deflated separately using their respective price indices, leading to more accurate measurement of real growth of the manufacturing sector.

 

On the inflation front, the economist highlighted that inflation has remained well within the Reserve Bank of India's target range of 2-6%. However, the central bank will definitely look at the second-round effects of food and energy prices on inflation and see if it has become "pervasive."

 

Retail inflation rose to 4.82% in August from 3.21% in February, the month during which war broke out between the US and Iran. Core inflation, which excludes food and fuel, was at 4.2% in August, whereas core inflation excluding precious metals was at 3.8% last month.

 

Nageswaran said that the external sector is becoming more and more challening every month. "I think that markets are beginning to sort of impart a greater sense of uncertainty and volatility to macro outcomes as we go into 2027," he said. 

 

Nageswaran said that downside risks to global growth have definitely increased along with rising destabilisation risks to the financial market. "All these statements we can make based on the fact that this increase in bond yields has been quite sharp and sudden and doesn't seem like it is ending anytime soon," he added.

 

Further, Nageswaran said that India needs to reduce its dependence on energy imports and diversify its sources. "I think import substitution and indigenisation are necessary. They are no longer taboo words or taboo policies," he said. His comments come amid the ongoing war in West Asia, which is now in its seventh month and has caused havoc in the global energy supply chain.  End

 

Reported by Pratiksha and Sagar Sen

Edited by Avishek Dutta

 

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