India's economic growth for the 2026/2027 fiscal year could be lower than previously expected amid higher oil prices due to the re-escalation of the Middle East war and the El Nino weather phenomenon, a senior official at the International Monetary Fund (IMF) told Reuters.
“The downside risks are probably twofold,” said Ranil Salgado, the IMF’s resident representative for India and Bhutan.
- “One is that the war is already starting to expand again, and that has implications for oil prices,” the official said.
- “The other risk was El Nino, which could lead to a poor monsoon,” he added.
Earlier this month, the IMF cut its GDP growth forecast for India by 10 basis points, from 6.5% expected in April, to 6.4%, for the 2026/2027 fiscal year ending March 31, 2027, due to higher energy prices.
“High-frequency indicators through April are showing quite a bit of resilience in overall economic activity, but these positive effects are more than offset for 2026 by higher energy prices in our baseline July update,” said Deniz Igan, deputy chief of the Macro-Financial Division in the IMF’s Research Department.
