How’s India’s Economy Coping With The War?

India’s goldilocks moment is, perhaps, gone. Oil and gas import bills have been rising, amidst huge uncertainties of supplies. Rupee depreciated 3.5% in the month since the Iran war began, and 10% over the past year. Anantha Nageswaran, India’s chief economic adviser, says the war will result in “considerable downside to FY27 growth estimate of 7-7.4%”. While he stopped short of saying by how much, leading global investment banks and rating agencies are out with their revised numbers. Goldman Sachs and Moody Analytics have revised their GDP growth forecasts to around 5.9-6.1%.

Last year, Nageswaran had projected that Trump’s 50% tariffs on India would reduce India’s GDP growth by 0.5-0.6%. Goldman Sachs and Moody Analytics forecasts suggest a projected damage from the Iran war on India’s GDP growth to be at least twice as much. That may sound ominous, but frankly a GDP growth forecast of close to 6% is quite impressive, given the global economic scene and India’s precarious situation. If the war continues and rupee depreciates further, expect downward revisions to these forecasts.