New Delhi, March 30 ICRA said on Monday that it estimates India's GDP growth to moderate to 6.5 per cent in 2026-27, from 7.6 per cent in the current fiscal year, due to the adverse impact of high energy prices and concerns about energy availability amid the West Asia conflict.
The growth projections assume an average crude oil price of USD 85/bbl in the 2026-27 fiscal year. It expects India's current account deficit (CAD) to widen sharply to 1.7 per cent of GDP in FY27 (from 1 per cent in the current fiscal year).
ICRA said that the risks to inflation stemming from the ongoing global energy supply disruptions amid the West Asia conflict could feed into inflationary expectations of households. This, along with heightened uncertainty, is likely to dampen consumer sentiment in the near term.
While trends in high-frequency indicators for January-February 2026 appear favorable, the heightened uncertainty around the duration of the West Asia conflict casts a shadow on the near-term macroeconomic outlook for countries like India, given their high import dependency for items such as crude oil, natural gas, and fertilizers.
If the conflict lasts for an extended period, the adverse implications could widen across sectors, amid an increase in input costs and the consequent impact on the profitability of Indian companies, ICRA said.
"India's GDP growth is expected to moderate to 6.5 per cent in FY27 from the projected 7.5 per cent in FY26, due to the adverse impact of high energy prices and concerns about energy availability, even as developments around tariffs, lower GST rates, policy rate cuts, subdued food inflation, and positive trends in the agricultural sector are likely to boost consumption," ICRA added.
Amid the projected uptrend in CPI inflation in FY27 (with risks tilted to the upside), ICRA expects the Monetary Policy Committee (MPC) to maintain its policy rates for a prolonged period throughout the fiscal year, despite the anticipated softening in GDP growth. However, the RBI may continue to intervene on the liquidity front during FY27, it said.
