New Delhi, March 30 India’s GDP growth is expected to moderate to 6.5 per cent in FY2027 because of elevated crude oil prices and concerns around energy availability, a report said on Monday.
The report from ICRA said CPI inflation is expected to trend higher at 4.3 per cent in FY27, up from 2.1 per cent in FY26.
The RBI Monetary Policy Committee is likely to keep policy rates on pause for an extended period even as growth moderates, it predicted.
The Reserve Bank of India may continue to manage liquidity conditions to support the system.
The report notes that high-frequency indicators showed favourable trends prior to the onset of geopolitical tensions.
However, the situation in West Asia introduces uncertainty into the near-term macroeconomic outlook, particularly given India’s dependence on imports of crude oil, natural gas, and fertilisers.
A sustained increase in energy prices could lead to higher input costs and may have implications for corporate profitability and growth, the report noted.
The ratings agency expects the current account deficit to widen to around 1.7 per cent of GDP in FY27 from about 1.0 per cent in FY26, assuming an average crude oil price of $85 per barrel.
It estimated that every $10 per barrel per barrel increase in crude oil prices could raise the CAD by 30–40 basis points.
Consumption trends have remained supported by factors such as GST rate rationalisation and festive demand. Meanwhile, the report indicates that growth in spending has been driven to an extent by lower-value transactions, with credit card volumes rising faster than transaction values.
The spending surge suggested that while overall consumption remains steady, trends in discretionary spending may continue to be monitored.
Investment activity is expected to benefit from the government’s continued focus on capital expenditure, with the FY27 Budget providing for an increase in capex, it predicted, adding that private sector investment activity may remain influenced by global developments and cost conditions in the near term.
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