Given the global uncertainties due to the Iran issue, the rupee has come down to below 95 against the US dollar. A study by SBI Research, released on Monday, says that if the rupee is pegged at 95 levels, the Indian economy will contract to become a $4.04-trillion economy. This would imply that India’s ambition of having a $5-trillion economy will not be achieved until 2029-30. It has been observed that the rupee has seen a massive slide lately owing to external factors and speculation. This problem needs to be rectified through changes in balance of payments.

The report states that crude oil prices above $100 and a significant increase in transportation and insurance costs are impacting the country's balance of payments. A comprehensive policy package is needed to address this. Issuing bonds for Indians living abroad could also be a better option. This SBI report comes after Prime Minister Narendra Modi appealed on Sunday to conserve foreign exchange, use fuel judiciously, stop gold purchases, and postpone foreign travel due to the Iran crisis.

SBI Research said that real GDP growth could be around 7.2 percent in the fourth quarter of fiscal year 2025-26. The economy could grow at a rate of 6.6 percent in 2026-27. Growth is expected to be 7.5% in 2025-26. The National Statistical Office will release fourth-quarter data along with provisional estimates of annual GDP for 2025-26 on May 29.