India’s Economy and Government Finances Face Mounting Costs from Iran War
- brg_news_room
- 11 minutes ago
- 1 min read
INDIA: India's economy is coming under increasing pressure from the ongoing Iran war, which has disrupted global energy supplies and driven up oil and gas prices. As the world's third-largest oil importer, importing around 90% of its crude oil needs, India is particularly exposed to higher energy costs and supply disruptions, including constraints on shipments through the Strait of Hormuz.
The Reserve Bank of India expects inflation to rise to an average of 5.1% in FY2026/27, while economic growth is forecast to slow to 6.6% from 7.7% a year earlier. Rising fuel import costs are also widening the country's external deficit and placing additional strain on government finances. To mitigate the impact, authorities have introduced measures to support the rupee, curb fuel demand and reduce fuel taxes. However, increased fertiliser subsidies, lower tax revenues and elevated transport costs are expected to push up the fiscal deficit and create further challenges for policymakers.
Source: Reuters
