India's GDP Growth to Hit 6.6% in FY27, Inflation Seen at 5.1%: Crisil

Prolonged closure of the Strait of Hormuz has pushed Brent crude price forecasts up to $90‑95 per barrel from $82‑87 previously and is expected to keep crude oil prices elevated for longer, the report from Crisil Ratings said.

The ongoing conflict has underscored the importance of building resilience in energy and food security amid the shifting geopolitical scenario which will be essential for sustaining high growth over the long run, it said.

The de facto shutdown of the Strait of Hormuz for over two months has created the largest energy shock on record, with S&P Global estimating supply losses of at least 10 per cent of global oil and derivatives output.

The shock has widened beyond energy to freight, insurance, fertilisers and supply chains, and will take time to normalise due to damage to oil and gas infrastructure in West Asia even after the route reopens.

Crude oil prices remained above $100 per barrel since the middle of March and crossed $110 per barrel in April despite the ceasefire.

Besides the repercussions of the ongoing West Asia conflict, El Niño conditions leading to sub-normal monsoon are also expected to impact India's growth-inflation mix this fiscal, the firm said.

Input cost pressures have increased significantly for producers, which will drag GDP growth and push up retail inflation. The government so far has limited the pass-through of higher energy prices to consumers and has announced some steps to cushion the industry.

Higher inflation on account of the disruptions to agricultural production and higher commodity prices will constrain household budgets and restrain private consumption, the report warned.

- IANS