S&P Predicts Slower Economic Growth for India in FY27 Due to Energy Stress and Weak Monsoon

India imports 88% of its crude oil requirements. A rise in global prices increases India's import bill and fuels domestic inflation. The impact of energy stress stemming from the conflict in West Asia is becoming evident; industries are facing a sharp rise in raw material costs, and there are delays in supplier delivery times.

High fertilizer prices are negatively affecting food production, leading to an increase in food prices. Rising inflation is eroding people's purchasing power and slowing down economic growth. S&P stated that consumer inflation would be 0.5–0.6 percentage points higher in the third quarter; it could rise to 5.1 percent in the current fiscal year.

Manufacturers are passing the burden of increased energy costs on to consumers. Prices of petrol, diesel, and cooking gas have also risen recently. All these factors are exerting upward pressure on inflation. S&P expects a hike in policy rates during the second half of the current fiscal year, which could serve as a measure to control inflation.