India's GDP growth may slip to around 6 per cent and retail inflation could rise to RBI’s upper tolerance band of 6 per cent in the current fiscal, if the Indian crude basket price averages USD 120 a barrel, EY India said on Wednesday.
EY India Chief Policy Advisor DK Srivastava said, although room for policy interventions is limited, policymakers need to consider upward revision in the repo rate and accelerated diversification of sources of crude supply as the price of the Indian crude basket (ICB) may rise further if the West Asian crisis persists.
"If the ICB price averages USD 120 per barrel in FY27, India’s real GDP growth may slip to about 6 per cent and CPI inflation may increase to 6 per cent... To minimise the adverse impact on fiscal deficit, increased energy prices should be passed on to the retailers to a relatively larger extent," Srivastava said.
1 April 2026
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The April 2026 release of the US Energy Information Administration EIA Short-Term Energy Outlook projects Brent crude oil prices to increase from an average of USD 81 per barrel in Q1 2026 to a peak of USD 115 per barrel in Q2 2026. Depending on how the crisis evolves, crude prices may fall in the future.
The International Monetary Fund (IMF) has projected India's GDP growth at 6.5 per cent for FY27, while the Asian Development Bank (ADB) and the World Bank expect it to be 6.9 per cent and 6.6 per cent, respectively.
The Reserve Bank of India (RBI), in its monetary policy review earlier this month, projected GDP growth for FY27 at 6.9 per cent compared to 7.6 per cent estimated in FY26. The RBI also projected inflation to average 4.6 per cent for FY27.
In the EY Economy Watch report, Srivastava said current indications suggest that the West Asian crisis may last well beyond expectations of a short-lived conflict. Even after it is resolved, considerable time would be required for the global crude supply situation to normalise.
"As such, India's growth may be lower than 6.5 per cent and inflation somewhat higher than RBI’s baseline projections," he said, adding that there is a likelihood of the ICB price exceeding USD 95 per barrel on average in FY27.
"Even so, India’s growth in FY27 is expected to be more than double that of global growth under an adverse scenario," Srivastava said.
