India’s GDP growth likely at 6.7 pc in FY27 despite geopolitical tensions: Report
New Delhi, April 6 : India’s economic growth is expected to remain resilient in the face of rising global uncertainties, with GDP projected to expand at 6.7 per cent in FY27, a new report said on Monday.
While ongoing geopolitical tensions in West Asia may create some challenges, the data compiled by CareEdge Ratings suggested that India’s macroeconomic fundamentals are strong enough to support steady growth.
The analysis highlighted that the impact of the West Asia conflict on India will primarily be felt through higher crude oil prices, which influence inflation, fiscal balance, and external accounts.
In its base case scenario, assuming average crude oil prices of around $90 per barrel, growth may moderate slightly from earlier projections of 7.2 per cent.
Inflation is expected to remain broadly under control, with consumer price inflation projected in the range of 4.5 per cent to 4.7 per cent in FY27 under the baseline scenario.
This assumes that the government limits the pass-through of higher global oil prices to domestic consumers.
However, a prolonged rise in crude prices could lead to somewhat higher inflationary pressures over time.
On the fiscal front, the government may face a modest increase in burden due to potential excise duty cuts on petroleum products, higher subsidy requirements, and slightly lower tax revenues.
This impact is estimated at around 0.5 per cent of GDP, which remains manageable in the broader context of India’s public finances.
Government bond yields are also expected to see mild upward pressure due to inflation and fiscal dynamics.
In the base scenario, yields on government securities are likely to average between 6.8 per cent and 6.9 per cent in FY27.
The report also noted that higher oil import bills, along with some pressure on exports and remittances, could widen the current account deficit to about 2.1 per cent of GDP.
Meanwhile, the Indian rupee is projected to average between 92 and 93 per dollar, according to the report.
While ongoing geopolitical tensions in West Asia may create some challenges, the data compiled by CareEdge Ratings suggested that India’s macroeconomic fundamentals are strong enough to support steady growth.
The analysis highlighted that the impact of the West Asia conflict on India will primarily be felt through higher crude oil prices, which influence inflation, fiscal balance, and external accounts.
In its base case scenario, assuming average crude oil prices of around $90 per barrel, growth may moderate slightly from earlier projections of 7.2 per cent.
Inflation is expected to remain broadly under control, with consumer price inflation projected in the range of 4.5 per cent to 4.7 per cent in FY27 under the baseline scenario.
This assumes that the government limits the pass-through of higher global oil prices to domestic consumers.
However, a prolonged rise in crude prices could lead to somewhat higher inflationary pressures over time.
On the fiscal front, the government may face a modest increase in burden due to potential excise duty cuts on petroleum products, higher subsidy requirements, and slightly lower tax revenues.
This impact is estimated at around 0.5 per cent of GDP, which remains manageable in the broader context of India’s public finances.
Government bond yields are also expected to see mild upward pressure due to inflation and fiscal dynamics.
In the base scenario, yields on government securities are likely to average between 6.8 per cent and 6.9 per cent in FY27.
The report also noted that higher oil import bills, along with some pressure on exports and remittances, could widen the current account deficit to about 2.1 per cent of GDP.
Meanwhile, the Indian rupee is projected to average between 92 and 93 per dollar, according to the report.