Chief Economic Adviser, Dr. V. Anantha Nageswaran
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ANI
Post GDP base year revision, on February 27, Nageswaran raised India’s GDP forecast for FY27 to 7 to 7.4 per cent from 6.8 to 7.2 per cent. “Clearly, there is considerable downside to this number. Data for March will not reveal much, since businesses are trying to meet full-year targets for FY26. High-frequency data for April and possibly May may give us a better handle on the likely growth rate for the new financial year. Similarly, the current account deficit too will widen significantly in FY27,” he said in preface of the Monthly Economic Review, prepared by Economic Affairs Department.
Further he recalled, what written last month, the impact of the conflict on India will be felt through four channels. First one is supply disruptions to oil, gas and fertilisers and more importantly, to exports as well. Second one is higher import prices. Third one is higher logistics costs (e.g., freight and insurance) and fourth one is a possible decline in remittances by Indians in the Gulf countries. (The slowdown in exports to Gulf countries may not be particularly consequential for overall exports.)
“The combined impact across the four channels on growth, inflation, the fiscal balance, and external balances is likely to be significant,” he said while adding that India will need to provide immediate relief to the most affected and vulnerable businesses and households, and at the same time, generate fiscal space to meet strategic and long-term needs that this conflict has underscored, such as the need to build long-term buffers in several commodities and materials, not just energy-related ones. “This calls for re-prioritisation of spending and targeted relief for the most affected and vulnerable businesses and households,” CEA suggested.
Meanwhile, the MER noted that early high-frequency indicators for March 2026 suggest a moderation in economic momentum, reflecting the initial impact of these global developments. E-way bill generation declined by 5.3 per cent on a month-on-month basis up to 22 March, indicating some moderation in goods movement; however, it remained higher by 9.4 per cent on a year-on-year basis. Flash PMI estimates for March 2026 point to a softening in output growth following the energy price shock.
At the same time, demand conditions appear relatively resilient: vehicle registrations grew by 19.1 per cent y-o-y up to 24 March 2026, and digital payment volume continued to expand in double digits up to 22 March. The March 2026 round of the Rural Economic Conditions and Sentiments Survey (RECSS), conducted during the last week of February 2026 and the first week of March 2026, indicates some softening in rural sentiment; however, consumption growth strengthened in the March 2026 round, it added.
It highlighted that while supply disruptions have added to cost pressures, selective price corrections in perishables, amid export-related dislocations, point to localised demand-supply imbalances. A sustained elevation in oil and gas prices could lead to broader second-round effects through input cost pass-through across sectors. Nonetheless, “the government remains vigilant, with measures underway to ensure adequate domestic energy availability and mitigate potential inflationary pressures,” the review said.
Published on March 28, 2026