The India April Economic Report says the West Asia conflict has now lasted about 60 days since February 28, and there is still no clear end in sight. Trust between countries remains low, and negotiations are not progressing well. This uncertainty is making it difficult to predict how long energy supply disruptions will continue.
A key concern is rising oil prices. India’s crude basket averaged about USD 113 per barrel in March and is close to USD 115 in April. Many global forecasts, like those from the International Monetary Fund, assume much lower oil prices, which makes their growth projections look more optimistic than reality. In truth, risks to growth are on the downside, while inflation risks are rising.
Energy-importing countries, especially in Asia, are under pressure. Some countries have built strong reserves, but many have not. The report highlights that building long-term buffers for energy and other key commodities is now a top policy priority for the next decade.
Countries are slowly passing higher energy costs to consumers. This is unavoidable because if demand does not fall, nations will have to pay even higher prices for imports. The report warns that once prices rise, they tend to stay high, even if the conflict eases.
For India, the focus should be on long-term stability rather than short-term growth boosts. Trying too hard to push growth now could hurt inflation, currency stability, and external balances. Policymakers are advised to stay cautious and balanced.
The report suggests five key actions for India:
Improve energy security without increasing dependency risks
Continue deregulation and reduce trade costs
Reform agriculture and water policies urgently
Promote job skills that are less affected by AI
Ensure stable and predictable tax policies to attract investment
India’s trade deficit has widened significantly, with merchandise deficit rising to USD 333.2 billion in FY26. This trend may continue in FY27. While foreign investment is improving, global competition for capital is also increasing, making it harder to attract funds.
On the ground, the conflict has already impacted India’s economy. The fertiliser sector is facing supply disruptions, business sentiment has weakened, and logistics indicators like e-way bills have slowed. However, demand in the economy remains relatively stable.
Inflation is still under control at the consumer level, with CPI at 3.4% in March 2026, helped by government measures. But rising wholesale prices show early signs of pressure. The central bank has kept interest rates steady at 5.25% and is closely watching the situation.
Despite global challenges, India’s economy shows resilience. Exports reached a record USD 860.1 billion in FY26, and services exports crossed USD 400 billion for the first time. However, March data showed a decline due to the conflict’s impact.
Globally, growth is expected to slow, but India remains a bright spot. Growth is projected around 6.5%, supported by strong domestic demand and policy support. Still, risks remain due to high energy prices and a likely weak monsoon caused by the El Niño effect.
Overall, the report concludes that while India is managing the situation well so far, risks are increasing. Inflation, fiscal deficit, and external balances could worsen if the conflict continues. Policymakers must stay focused on long-term stability while handling short-term challenges carefully.
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