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India has warned that its growth forecast of 7.0%–7.4% for the financial year ending March 2027 faces “considerable downside” risk due to rising energy costs and supply‑chain disruptions linked to the Iran war.
The conflict, which began on Feb. 28 following U.S. and Israeli strikes on Iran, has disrupted goods movement through the Strait of Hormuz — a critical waterway carrying 20% of global oil — driving up energy and freight costs and straining supply chains.
“The trade deficit will rise significantly” in the next financial year ending March 2027 and will lead to “widening [of] the current account deficit,” India’s Chief Economic Adviser V. Anantha Nageswaran wrote in the report published Saturday.
“Keeping it manageable will require burden-sharing between the government, via fiscal absorption, and households and businesses,” he said. However, the pass-through of higher import prices to end-users “will also moderate demand growth,” said Nageswaran.
