India Economic Perspectives "Growth tailwinds strengthen as oil risks..."

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India Economic Perspectives "Growth tailwinds strengthen as oil risks..."

Global Research

7 July 2026ab

India Economic Perspectives Economics

IndiaGrowth tailwinds strengthen as oil risks ease;

monsoon risks remain Tanvee Gupta Jain

Economist

tanvee.guptajain@ubs.com

+91-22-6155 6070

Revising India's FY27 growth forecasts higher to 6.7%YoY

The US–Iran memorandum ensuring 60 days of safe passage through the Strait of

Hormuz has reduced geopolitical and energy supply risks. Reflecting the improved

outlook, our global oil team also lowered oil price forecasts, with Brent now projected to

average US$84/bbl in 2026 and US$75/bbl in 2027. Lower geopolitical risk and a quick

rebound in flows have led to a steeper price decline than they had expected. While India

did not experience meaningful physical energy supply disruptions during the recent

tensions – supported by its large refining capacity, diversified supply sources and active

policy buffers – it would have remained vulnerable if the energy shock had lasted for

longer. Building in lower global oil prices, easing supply disruptions and accommodative

monetary conditions (on RBI recent measures to support INR), we revise India's real GDP

growth higher to 6.7% (from 6.2%YoY estimated earlier). Even as demand indicators

remain strong, activity indicators that had weakened during the June quarter will likely

begin to improve.

Below-normal rainfall to weigh on rural demand

After an exceptionally weak June, monsoon activity has begun to recover in early July.

June rainfall ended nearly 40% below the long-term average, making it one of the driest

Junes on record, but the southwest monsoon has since advanced across most remaining

parts of India. A low-pressure system over the Bay of Bengal has supported a more active