Iran Conflict: FinMin Says No Change In Budgetary Projections Despite 'Covid-Like Disruption'

As the Iran war escalates and the Middle East remains on the the boil, questions have risen around the health of economies and what to expect going ahead. Amid the macroeconomic jitters, the Indian government has indicated that it is not at a stage to re-assess budgetary projections of key budgetary projections. 

Acknowledging the uncertain global cues and volatility, Finance Ministry officials compared the scale of the Iran war to a Covid-like disruption. They underlined that while no steps have been initiated regarding spending curbs across ministries, it has not been ruled out entirely.

During her Budget 2026-27 speech, Finance Minister Nirmala Sitharaman had estimated central net tax receipts to be at Rs 28.7 lakh crore, up by nearly 7% over the revised estimates of FY26.

Similarly, gross tax revenue was estimated at Rs 44.04 lakh crore, representing an 8% growth over the revised estimate for FY26.

Additionally, the budget assumed a nominal GDP growth of 10% for FY27, with the nominal GDP projected at Rs 393 lakh crore.

ALSO READ: Poor Countries 'Hit Hardest': IMF Chief On Iran War's Toll On Global Economy

The officials said that Centre continues to focus on capital expenditure and key infrastructure projects in railway and aviation. Moreover, fiscal glide paths remains intact with target unchanged at 4.3% for current fiscal.

Relief measures are being worked out for small businesses and most-impacted sectors, and the government is expected to roll out Rs 2.5 lakh crore Credit Guarantee Scheme for MSMEs, they added. 

On similar lines to support offered during the Covid pandemic, the credit guarantee scheme will be proposed as Credit Line Guarantee Scheme (CLGS) 5.0. Further, they highlighted that disinvestment and asset monetisation plans remain on track.

Iran War Impact

The ongoing Iran war has given rise to a host of issues, including a crunch in the LPG supplies. Oil markets have been erratic and prices continue to climb, weighing on consumers' pockets. Brent, the global crude benchmark, peaked to nearly $120 per barrel last month.

The conflict has led to the biggest-ever oil disruption in history, with blockade in the key oil vessel transit route, the Strait of Hormuz. The waterway accounts, which accounts for one-fifth in global oil supplies, is presently being controlled by Iran.

Also Read: North American Oil Is In Demand As World Grasps For Supplies

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