- India is projected to have strong economic growth in FY27 despite rising global risks
- High crude oil prices pose the biggest downside risk to India's growth and inflation outlook
- India's macroeconomic buffers help cushion the impact of elevated global oil prices
India is expected to deliver a strong economic performance in FY27, even as global risks intensify, according to Aurelien Kruse, Lead Economist for India at the World Bank. While the overall outlook remains constructive, Kruse cautioned that risks are clearly tilted to the downside amid rising global uncertainties, particularly from geopolitics, trade policy shifts and energy prices.
A key vulnerability for India, he said, is the prospect of prolonged high crude oil prices. Elevated oil prices are seen as the most significant downside risk to both growth and inflation, with the World Bank building in an assumption of $90–100 per barrel for global oil prices in its growth projections for India. However, Kruse noted that the potential fallout from higher oil costs is likely to be cushioned by India's strong macroeconomic buffers.
Despite being a large net energy importer, India's structural resilience limits its exposure to global shocks. Net energy imports account for around 2.8-3% of GDP, making the oil shock more manageable compared with peers such as Thailand, which have higher relative exposure. Low external debt further insulates the economy from volatility in global financial conditions, Kruse said.
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The overall risk environment, however, remains highly uncertain and skewed to the downside. Kruse highlighted that the new GDP series has revealed more stable growth dynamics compared with the earlier base year, reinforcing confidence in the underlying strength of the economy. India's performance in FY26 underscores this resilience, as the economy remained strong despite a sharp global policy pivot and heightened trade tensions.
While net foreign direct investment inflows continue to be weak, Kruse pointed out that strong gross FDI numbers indicate sustained investor interest in India as a long-term growth destination. This reflects confidence in the country's structural reform agenda and domestic demand prospects. Even in the face of high tariffs imposed by the US and a challenging external backdrop, India continues to stand out as the world's fastest-growing major economy. According to the World Bank, this resilience positions India well to navigate global headwinds, even as policymakers remain alert to the risks posed by energy prices and geopolitical uncertainty.
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