India’s FY27 real GDP growth may slip to around 6%, and retail inflation could rise to RBI’s upper tolerance band of 6% in the current fiscal, if the Indian crude basket price averages $120 a barrel, an EY India report said. 

In the report, EY India Chief Policy Advisor DK Srivastava said that, although room for policy interventions is limited, policymakers need to consider upward revision in the repo rate and accelerated diversification of sources of crude supply as the price of the Indian crude basket (ICB) may rise further if the West Asian crisis persists.

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“If the ICB price averages $120 per barrel in FY27, India’s real GDP growth may slip to about 6 percent and CPI inflation may increase to 6 percent… To minimise the adverse impact on fiscal deficit, increased energy prices should be passed on to the retailers to a relatively larger extent,” Srivastava said.

Crude oil outlook

The April 2026 release of the US Energy Information Administration EIA Short-Term Energy Outlook projects Brent crude oil prices to increase from an average of $81 per barrel in Q1 2026 to a peak of $115 per barrel in Q2 2026. Depending on how the crisis evolves, crude prices may fall in the future.

India’s GDP growth forecast

The International Monetary Fund (IMF) has projected India’s GDP growth at 6.5% for FY27, while the Asian Development Bank (ADB) and the World Bank expect it to be 6.9% and 6.6%, respectively.

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The Reserve Bank of India (RBI), in its monetary policy review earlier this month, projected GDP growth for FY27 at 6.9%, down from 7.6% estimated for FY26. The RBI also projected inflation to average 4.6% for FY27.

Long-term impact

In the EY Economy Watch report, Srivastava said current indications suggest that the West Asian crisis may last well beyond expectations of a short-lived conflict. Even after it is resolved, considerable time would be required for the global crude supply situation to normalize.

“As such, India’s growth may be lower than 6.5 percent and inflation somewhat higher than the RBI’s baseline projections,” he said, adding that there is a likelihood of the ICB price exceeding USD 95 per barrel on average in FY27.

“Even so, India’s growth in FY27 is expected to be more than double that of global growth under an adverse scenario,” Srivastava said.