India’s economy is well-positioned to withstand the impact of the ongoing oil shock and geopolitical tensions in West Asia, with GDP growth projected at 6.8 to 7.1 per cent in FY27, according to a report by SBI Research.
The report noted that India has entered the current phase of global uncertainty from a position of strength, supported by robust macroeconomic fundamentals.
“The country has entered the global geo-political conflict from a situation of strength this time with FY26 growth at 7.6 per cent,” the report said, adding that India had demonstrated similar resilience during earlier global disruptions.
While growth for FY27 is projected at around 6.8 per cent, the report flagged potential risks such as the possibility of a Super El Niño, which could impact economic activity. Inflation is expected to average around 4.5 per cent, while the fiscal deficit is projected at 4.5 to 4.6 per cent.
Highlighting the strength of the financial system, the report noted that India’s banking sector remains stable. It also called for a comprehensive policy approach to support the balance of payments and the rupee.
The report observed that the ongoing West Asia conflict has created “multiple vortexes of headwinds,” affecting sectors such as agriculture, MSMEs, consumption, and global supply chains. However, it also identified emerging opportunities for India to strengthen its position in global value chains.
According to the report, financial uncertainty in hubs such as Dubai and Abu Dhabi could benefit India’s GIFT City as a stable global financial destination.
It also pointed out that disruptions in airspace over parts of the Middle East could open opportunities for Indian airports to emerge as alternative transit hubs, provided investments are made in infrastructure and passenger services.
On monetary policy, SBI Research noted that several global central banks have paused rate actions in 2026 after earlier easing. For India, the Reserve Bank is likely to maintain a status quo approach in the near term.
“The growth-inflation paradox leaves little room for a rate decision at this juncture,” the report said, indicating that a “lower for longer” interest rate regime may continue until the full impact of global developments becomes clearer.
-ANI
