New Delhi: S&P Global Ratings on Thursday said India is expected to grow at 6.3 per cent if the oil price averages $130/barrel in the current fiscal year amid the West Asia crisis. “The fiscal strain from the energy price shock is unlikely to impact India’s sovereign credit rating, as India has the political commitment to fiscal consolidation over the long term,” the rating agency said.
Commenting on the Indian economy due to the West Asia war, S&P director, Sovereign and International Public Finance Ratings, Yee Farn Phua said that considering a baseline assumption of crude at $85/barrel, India will grow 7.1 per cent in 2026-27. “That’s still a very strong number compared to any major economies out there. Even in the alternate scenario, if I were to say, $130/barrel average, we are still looking at the growth at 6.3 per cent. That is still going to be the highest among major economies,” Phua said at a webinar.
S&P also said energy supply disruptions that lead to fuel rationing or shortages of related products, such as fertilisers, would be a risk. “India could see a weaker current account balance, higher costs for producers squeezing margins, higher consumer prices reducing purchasing power, and fiscal strains, as the government steps in to cushion some of the shock for consumers,” S&P said.
“The government’s fiscal consolidation efforts continue to be very strong. India has a lot of physical flexibility on the spending side, especially on infrastructure. So, in case some of the areas where they have to spend more, for example, the subsidy bill, they might cut in other places to make sure that they will still hit the fiscal deficit target,” Phua added.
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