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India’s Economy to Grow Over 7% Despite West Asia Conflict: CEA Nageswaran

India's economy is expected to sustain growth above seven per cent in the near term despite geopolitical tensions in West Asia, according to Chief Economic Adviser V. Anantha Nageswaran. He flagged potential pressures on the external sector, cautioning that elevated import costs could push the current account deficit to around two per cent of GDP in FY27. Gross FDI inflows are projected at $90-95 billion in FY26, with momentum expected to continue as manufacturing strengthens. Nageswaran also highlighted progress on regulatory reforms, noting that 86 per cent of deregulation targets have been achieved across sectors.

Key Points: India to Grow Over 7% Despite West Asia Conflict: CEA

  • India likely to sustain over 7% growth near term
  • CEA flags CAD widening to ~2% of GDP in FY27
  • Gross FDI inflows expected $90-95 billion in FY26
  • 86% of deregulation targets achieved across sectors
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India to grow over 7 pc despite West Asia conflict: CEA Nageswaran

India's economy likely to sustain over 7% growth despite West Asia tensions, says CEA Nageswaran. He flags CAD risks, FDI inflows, and regulatory progress.

"India's reliance on imported crude should not be viewed as a vulnerability in isolation, as alternative energy options also come with cost-related challenges. - V. Anantha Nageswaran"

New Delhi, May 2

India's economy is likely to sustain growth above seven per cent in the near term even as geopolitical tensions in West Asia pose risks to the macroeconomic outlook, Chief Economic Adviser V. Anantha Nageswaran said on Saturday.

He noted that the timing of the conflict coincides with expectations of another year of strong growth, adding that the Union government is closely monitoring and managing crude oil supply dynamics.

CEA Nageswaran said India's reliance on imported crude should not be viewed as a vulnerability in isolation, as alternative energy options also come with cost-related challenges.

However, he flagged potential pressures on the external sector, cautioning that elevated import costs and moderation in remittance inflows could push the current account deficit (CAD) higher.

He indicated that the CAD could widen to around two per cent of GDP in FY27 from below one per cent in FY26.

On capital flows, CEA Nageswaran said India continues to remain an attractive destination for investors despite global uncertainties.

"Gross foreign direct investment (FDI) inflows are expected to be in the range of $90-95 billion in FY26, with momentum likely to hold in the following year as the country strengthens its manufacturing base."

Addressing inflation, the CEA pointed to a gradual decline in the share of food in the consumer price index basket, even as short-term risks from weather conditions and input cost pass-through remain.

Nageswaran also highlighted progress in easing regulatory frameworks, noting that states have made substantial headway in deregulation efforts across key sectors.

At the same time, he said that while corporate profitability has improved significantly in recent years, private investment has not kept pace, signalling a divergence between earnings growth and capital formation.

Highlighting progress on regulatory reforms, Nageswaran said states are actively pushing deregulation across sectors.

According to the CEA, nearly 86 per cent of the identified deregulation targets across 23 areas have already been achieved.

- IANS

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Reader Comments

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James A
Impressive projections! The CEA's confidence in FDI flows of $90-95 billion shows India's resilience as an investment destination. The deregulation progress – 86% targets achieved – is a strong signal for ease of doing business. But the private investment gap with corporate profits needs attention; earnings growth must translate into capex for sustained momentum.
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Priya S
CEA Nageswaran is right that crude dependency isn't a standalone vulnerability – but let's not downplay the risk. Higher import costs will hit common people through fuel and food prices. The inflation mention is brief; weather risks and input costs could spike soon. Hope the RBI is ready with rate cuts if needed. 🤞
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Michael C
As an expat, I find the FDI optimism interesting. India's manufacturing push is real, but global investors will watch execution. The 86% deregulation achievement is notable; state-level reforms often lag. My concern: if CAD widens, the rupee could face pressure, impacting imports and inflation. CEA's tone is confident, but the devil is in the details.
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Vikram M
Bold projection of 7%+ growth given the global headwinds. CEA's emphasis on easing regulations is good – we need less red tape for businesses. But the private investment lag is concerning; corporates sitting on profits instead of investing? That's a structural issue. Also, relying on alternative energy is fine, but we need realistic timelines for transition. Solid report overall.
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Rohit P
Honestly, these numbers sound too optimistic. West Asia conflict isn't going away soon, and crude at

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