ICRA currently pegs the GDP growth at 7.0% in Q4 FY2026, lower than the National Statistical Office (NSO’s) implicit growth projection of 7.3% for the quarter. A large part of the adverse impact of the West Asia crisis is likely to manifest in Q1 FY2027. Assuming an average crude oil price of $85/barrel in FY2027, ICRA projects the GDP growth to slow down to 6.5% in the ongoing fiscal from 7.5% estimated for FY2026. These estimates are subject to sizeable downside risks owing to a further escalation of the conflict and tighter availability of inputs, as well as the impact of the potential development of El Nino conditions and a below-normal monsoon (forecast: 92% +/-5% of Long Period Average; lowest estimate in last 25 years).

CPI/WPI: Consumer/Wholesale Price Index; CAD: Current Account Deficit; Source: ICRA Research