India’s GDP, inflation at risk amid West Asia tensions, oil price surge: Economists

Economic Impact of Oil Prices and Conflict - The ongoing conflict in West Asia and rising crude oil prices could reduce India's economic growth by 15–40 basis points (bps) in the next financial year [1][11] - If crude prices remain in the $100–$120 per barrel range, India's GDP growth may fall by up to 40 bps to around 6.8% in FY27 [2][12] - A 10% increase in average crude prices could lower GDP growth by 20–25 bps from the projected 7.2% [9][12] Inflation Projections - Retail inflation may exceed 5% in FY27, up from the current estimate of 4.3%, depending on whether higher fuel costs are passed on to consumers [3][12] - Economists expect inflation to rise by 40–50 bps due to higher input costs and supply disruptions [8][12] - A 10% increase in consumer prices for petrol and diesel could push inflation up by about 30 bps [7][12] Market Reactions and Policy Implications - Oil marketing companies may absorb some of the increased costs in the short term, keeping retail prices unchanged [7][12] - Prolonged volatility in oil prices could limit the scope for interest-rate cuts, likely keeping the policy rate unchanged in FY27 [8][12] - The economic outlook remains uncertain, contingent on the duration of the conflict and its implications for domestic investment and external trade [11][12]