India's 7% Growth Target Possible if Oil Stays Near $70

• India's economy could reach 7% growth if oil prices remain near $70 per barrel.
• A senior Reserve Bank of India official believes lower oil prices would ease inflation and improve economic prospects.
• The RBI had previously lowered its growth forecast to 6.6% due to Middle East instability.
• India is actively diversifying its oil imports to mitigate supply risks.
• Current oil prices have seen a slight decrease, with Brent below $73 and WTI below $70.

India's economy could return to a growth trajectory of 7% or more in the fiscal year ending March 2027 if oil prices stabilize around the current $70 per barrel, according to Nagesh Kumar, an external member of the Reserve Bank of India’s monetary policy committee.

Kumar told Bloomberg that lower oil prices, driven by eased Middle East tensions and increased tanker traffic through the Strait of Hormuz, would alleviate inflationary pressures and improve the economic outlook for India, which imports over 85% of its oil.

This projection comes after the RBI downgraded its growth forecast to 6.6% for the fiscal year to March 2027, citing uncertainty surrounding the Middle East crisis. The central bank had previously noted that while the economy remained resilient, the oil supply crisis posed near-term risks to growth and inflation.

To counter supply disruptions, Indian refiners are diversifying imports, increasing purchases of Russian oil and sourcing from Venezuela and Brazil. If oil prices remain at current levels, it would benefit India's economy and reduce pressure on its budget deficit and current account.

As of Thursday, Brent Crude prices were trading just below $73 per barrel, down about 1%, while WTI Crude had slipped below $70, down 0.68%. Oil prices have seen a decline this week as the market anticipates potential increases in crude supply.