New Delhi: Global financial services firm Nomura has projected that India’s economy will grow by 7 per cent in FY27, indicating resilience despite rising geopolitical tensions in West Asia and concerns over higher energy prices.
However, the brokerage has slightly trimmed its earlier growth estimate and warned that a prolonged conflict in the region could put pressure on inflation and the country’s external balance.
The report was authored by Sonal Varma and economist Aurodeep Nandi. It noted that geopolitical tensions are pushing up energy costs across Asia, which could drive inflation higher in several economies, including India.
Nomura has raised its inflation forecast for India in FY27 to 4.5 per cent, up from its earlier estimate of 3.8 per cent. The firm also expects the country’s current account deficit (CAD) to rise to 1.6 per cent of GDP, about 0.4 percentage points higher than its previous projection.
According to the economists, early data for the first quarter of 2026 indicates that consumption and industrial activity remain strong in India. However, exports and government spending appear weaker.
The report also cautioned that energy shortages, particularly disruptions in natural gas supply due to tensions in West Asia, could affect industrial and services activity in the country.
Despite these risks, Nomura believes India will continue to experience a cyclical economic recovery, supported by past policy easing, structural reforms, rising wages and easing trade tensions with the United States.
The economists expect India’s growth to moderate slightly to 7 per cent in FY27, compared with an estimated 7.6 per cent in FY26, mainly due to potential spillover effects from global fuel supply shocks.
Rising fuel costs are already being felt domestically. The government has recently increased liquefied petroleum gas (LPG) prices, and there have been reports of natural gas shortages.
Nomura expects further price pressures in sectors such as transport, restaurants, hotels and other services, which could push overall inflation higher.
However, the report assumes that petrol and diesel prices will remain unchanged for now, with oil marketing companies absorbing the impact of higher global crude prices.
If fuel costs are passed on to consumers, Nomura estimates that every 10 per cent increase in oil prices could raise inflation by about 0.5 percentage points.
With inputs from IANS