India’s economy is expected to grow 6.6-6.8% in the current financial year, with easing global energy prices and the normalisation of shipments through the Strait of Hormuz likely to improve growth and inflation prospects, according to EY Economy Watch.The report said a gradual normalisation of global energy markets is expected to ease supply-side pressures, improve cost conditions and support both economic growth and inflation outcomes during FY27.Considering recent geopolitical developments, if global crude oil prices remain at relatively lower levels and shipments through the Strait of Hormuz normalise, the positive momentum in India’s growth outlook is likely to be restored, it said.“We expect, in FY27, real GDP growth at 6.6-6.8 per cent, CPI inflation at 4.5 per cent, nominal GDP growth at 12.5 per cent, Government of India fiscal deficit at 4.4 per cent and current account deficit at 1.5 per cent of GDP,” EY Economy Watch said.
Inflation, current account to remain manageable
The report said inflation is expected to remain broadly manageable at around 4.5%, supported by moderating commodity prices and improving supply conditions.A moderation in global energy prices and improving external conditions are also expected to support the external sector, with the current account deficit projected at 1.5% of GDP.
Domestic demand remains key growth driver
EY said India continues to demonstrate strong economic resilience despite external uncertainties, backed by robust domestic fundamentals and sustained private sector activity.High-frequency indicators continue to point to underlying economic strength, including healthy manufacturing and services activity, steady credit growth, improving industrial output and resilient automobile demand.“India’s medium-term growth prospects remain supported by strong domestic drivers, with domestic consumption, investment, and services sector performance continuing to play a central role in economic expansion,” the report said.
Infrastructure, energy security to strengthen outlook
The report said India’s well-developed petroleum refining ecosystem remains a key strength, helping enhance energy security, support petroleum product exports and reduce external vulnerabilities.“Increased focus on infrastructure development, supply chain resilience, and strategic preparedness may help strengthen India’s ability to navigate future geopolitical and economic uncertainties,” it added.
