S&P Global on Wednesday lowered India’s growth forecast for current fiscal (FY27) by 50 basis points to 6.6 per cent.
A report titled, ‘India Forward’, jointly prepared by S&P Global and Crisil, said that India is facing external economic shock from energy supply disruptions, rising oil and gas prices and currency volatility. “The shock could be an opportunity to address tactical issues and remove roadblocks, to help achieve its longer-term economic growth and sustainability goals,” it said while advocating that India should devise a comprehensive energy storage policy to create strategic buffers.
“As the duration of the West Asia crisis rises, we see newer stress points emerge. The rupee weakening and oil prices rising is a double whammy of sorts. It all creates pressure on growth,” Crisil Chief Economist Dharmakirti Joshi said while releasing the report.
Joshi said amid the West Asia conflict India should focus on energy and food security and fertilizer sector. “If the crisis continues, the winter crop could face (fertilizer) shortages, but for summer crops we are reasonably well placed,” he said.
Calling for more reforms to deal with the crisis, Joshi said India needs to become more competitive to take advantage of the recently signed free trade agreements (FTAs) which gives market access through lower tariffs.
“You got market access through lower tariffs ... Now what you need to do is become more competitive and that requires variety of reforms,” Joshi said.
Since the beginning of the war in West Asia on February 28, crude oil prices have risen significantly, stoking inflation fears. Crude prices soared to a four-year high of $126 per barrel on April 30, from about the USD 73 level before the war. Brent fell to $97.77 /Bbl on May 6.
Oil price impact
Asked about the impact of higher crude oil prices on wholesale (WPI) and retail (CPI) price inflation, Joshi said since the pass through of global crude oil prices has not happened to households the WPI inflation numbers which also accounts for imported items will come in higher than the CPI.
Although the government has hiked prices of commercial LPG cylinders, it has not hiked prices of petrol, diesel and domestic LPG to shield consumers from the impact of the West Asia crisis.
“Higher global crude prices will show a larger impact on WPI in the form of imported goods and raw materials and less on CPI as the government has been holding pump prices stable. The April print of inflation data will see the number rising, but WPI will be higher than the CPI in April,” Joshi said.
The central bank has projected headline inflation to average 4.6 per cent in FY27, and flagged upside risks to inflation forecasts. As per the latest data, consumer price index (CPI) inflation rose to a one-year high of 3.4 per cent in March, while wholesale price index (WPI) inflation was at 38-month high of 3.88 per cent.
Published on May 6, 2026