Ind-Ra says West Asia tensions, El Nino to drag FY27 growth to 6.7%

New Delhi: Higher crude oil and food prices amid uncertainty arising from the West Asia conflict, along with the likely impact of an evolving El Nino on agriculture, will drag India's economic growth down to 6.7% in 2026-27, India Ratings and Research (Ind-Ra) said on Tuesday.

Gross domestic product (GDP) growth for the fourth quarter of 2025-26 is projected at 6.7%. The National Statistics Office is scheduled to release the provisional GDP estimates for 2025-26 and quarterly estimates for the January-March period on June 5.

GDP growth for 2025-26 is forecast at 7.6% year-on-year, based on official estimates.


Megha Arora, director-economics at Ind-Ra, said key headwinds in the current financial year include geopolitical tensions, high inflation, rupee depreciation, lower capital expenditure, weak global trade, strong 2025-26 growth (base effect), low industrial production and a likely El Nino from mid-2026.

Ind-Ra projects inflation at 4.4% in 2026-27, lower than the central bank's forecast of 4.6%.

The agency said that easing of West Asia tensions, a decline in crude oil prices to below $95 a barrel, a weaker El Nino and stronger capital flows could boost the growth estimate. -Our Bureau