India's economic growth to slow to 6.8% FY27 amid West Asia crisis, El Nino impact
Earlier this month, the Reserve Bank of India (RBI) had raised growth projections from 6.6% to 6.7% citing resilient domestic economy.
India's economic growth is expected to decelerate to 6.8% for the fiscal year 2027, according to India Ratings & Research (Ind-Ra). This projection, higher than the previous 6.7% forecast in May, is influenced by several factors. Higher fuel and food inflation, stemming from the ongoing West Asia conflict, weakened currency, and the potential impact of El Niño on agriculture, are contributing to the slowdown in GDP growth.
Ind-Ra's Chief Economist, Devendra Pant, estimates the average crude oil price at $85 per barrel for 2027, down from $95 per barrel in May 2026. The rupee-dollar exchange rate is also expected to depreciate by 6.4% year-over-year to ₹93.98, as opposed to ₹94.28 in May 2026. Ind-Ra anticipates quarterly GDP growth rates of 6.9%, 6.6%, 6.7%, and 6.9% for the April-June, July-September, October-December, and January-March quarters respectively, contrasting with the RBI's earlier predictions of 7%, 6.4%, 6.5%, and 6.8%.
Despite lower oil prices benefiting the economy by reducing the trade/current account deficit, the higher inflation due to El Niño may stifle the upside growth from decreased oil prices. The agency projects retail inflation to average 4.9% in 2027, compared to 2% in 2026, while the current account deficit is estimated to rise to 1.5% of GDP from 0.6% in 2026.
Ind-Ra expects the fiscal deficit target of 4.3% to be challenging due to subsidies on liquefied petroleum gas and fertilizers.
Written by urgent.news from The Hindu's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
