Steady outlook rests on assumption of swift end to Gulf war

India's real GDP is expected to grow at 6.9 percent in 2026-27, according to the RBI’s latest annual report. But the forecast comes with a rider. It rests on the assumption that the Gulf war’s adverse impact would be contained in the near term.

Steady outlook rests on assumption of swift end to Gulf war. India's real GDP is expected to grow at 6.9 percent in 2026-27, according to the RBI’s latest annual report. But the forecast comes with a rider. It rests on the assumption that the Gulf war’s adverse impact would be contained in the near term. What the central bank did not estimate is the possible impact of a prolonged conflict. As the Union finance minister noted, it’s undeniable that the three Fs of forex reserves, fertiliser subsidies and fuel prices are under intense pressure. On its part, the government has raised import duties on gold, and hopes that the higher duties on rising prices along with the Prime Minister’s plea to defer purchases will curb demand and reduce the strain on reserves. Even if the conflict ends soon, the full impact of elevated energy prices, supply...