NEW DELHI: A lasting peace in West Asia will restore India’s growth momentum with the GDP likely growing at 6.6-6.8% in FY27 if crude prices settle at relatively lower levels and shipments through the Strait of Hormuz normalise, according to EY.
“A gradual normalisation of global energy markets is expected to ease supply-side pressures, improve cost conditions, and support both growth and inflation outcomes during FY27,” according to the June 2026 edition of EY Economy Watch.
The report pegs CPI inflation at 4.5%, fiscal deficit at 4.4% and current account deficit at 1.5% of the GDP for FY27.
The RBI, at its June policy meeting before the US-Iran peace deal, assessed real GDP growth at 6.6% and raised its CPI inflation projection to 5.1%.
With a quick normalisation of the West Asia situation, pressure on inflation might ease somewhat in the last three quarters of FY27, the EY report stated. However, it might still be in the range of 4.5-5%, it added.
One important feature of FY27 growth is the likelihood of relatively higher nominal GDP growth compared to FY26, according to the EY report. “Higher nominal GDP growth of about 12.5% is likely to strengthen revenue growth, supporting fiscal consolidation while creating space for continued developmental and infrastructure spending,” wrote D K Srivastava, chief policy advisor at EY India.
High-frequency indicators continue to reflect underlying economic strength, with healthy manufacturing and services activity, steady credit growth, improving industrial output, and resilient automobile demand, he said, adding India’s medium-term growth prospects are on track supported by strong domestic drivers.
The report also highlighted that the country’s dependence on imported crude has increased over time while domestic production volume has fallen, and pitched for reversing the trend.
Source: The Financial Express
