India’s growth may be affected if crude oil prices remain high, GDP may slip: Report
New Delhi, Apr 29: If the crude oil prices remain high, India’s economic growth could take a hit and its GDP expansion may drop to around 6 percent in the current financial year, according to consultancy firm EY.
According to the firm’s latest assessment, persistently high oil prices could significantly impact macroeconomic stability by pushing up inflation and weakening overall demand conditions.
The estimate marks a sharp downside from earlier projections of 6.8–7.2 percent growth for FY27, highlighting the growing risks from global energy market volatility.
The warning comes at a time when geopolitical tensions, particularly in West Asia, have kept crude prices elevated.
Higher oil prices tend to widen India’s import bill, given its heavy reliance on imported energy, while also feeding into domestic inflation.
EY noted that inflation could rise towards the upper tolerance band of the Reserve Bank of India if crude sustains at such high levels.
This could limit the central bank’s room to support growth through accommodative monetary policy.
The impact of expensive crude is multi-layered for the Indian economy. Higher fuel costs increase input prices for industries, raise transportation expenses, and ultimately reduce consumer purchasing power.
This combination can dampen both investment and consumption, the two key drivers of growth.
The assessment also underscores the sensitivity of India’s growth outlook to external shocks.
While the country remains among the fastest-growing major economies, sustained pressure from energy prices could alter its trajectory in the coming fiscal year. (BVI)
