Credit rating agency ICRA in its latest report has said that India's Gross Domestic Product (GDP) growth is likely to moderate to 6.5 per cent in the coming fiscal year (FY27) from the projected 7.5 per cent in FY26, due to rising global energy prices and supply concerns stemming from the ongoing West Asia conflict. It said the growth projections assume average crude oil price at $ 85/bbl in 2026-27 fiscal year. Additionally, it said India’s current account deficit (CAD) is expected to widen to 1.7 per cent of GDP in FY27, up from an estimated 1.0 per cent in FY26. 

According to the report, the upside risks to inflation stemming from ongoing West Asia conflict-related energy supply disruptions could feed into inflationary expectations of households. This, along with heightened uncertainty is likely to sour consumer sentiments in the near term. It said while trends in high frequency indicators for January-February 2026 appear favourable, the heightened uncertainty around the duration of the West Asia conflict casts a shadow on the near-term macroeconomic outlook for countries like India amid high dependency on imports of crude oil, natural gas, and fertilisers. 

ICRA said if West Asia conflict lasts for an extended period, the adverse implications of the same could widen across sectors, amid an uptick in input costs and the consequent impact on profitability of India Inc. It also said CPI inflation is expected to trend higher at 4.3 per cent in FY27, up from 2.1 per cent in FY26. Amid the projected uptrend in the CPI inflation in FY27 (with risks tilted to the upside), it expects the RBI’s Monetary Policy Committee (MPC) to maintain an extended pause on policy rates throughout the fiscal year, even as the anticipated softening in the GDP growth. However, it expects the RBI to continue to intervene on the liquidity front during FY27.