Structural reforms, strong fundamentals and demand to support India's growth
New Delhi, June 17
India is expected to remain resilient despite elevated energy prices driven by the West Asia conflict, supported by strong economic fundamentals, structural reforms and healthy domestic demand, according to a report released on Wednesday.
A report by Crisil said that while a sustained energy shock could increase cost pressures across sectors and weigh on economic activity, India's growth outlook remains comparatively strong.
Although crude oil prices have moderated following the announcement of a memorandum of understanding between the US and Iran this week.
The report further stated that India's diversified economic structure and strong domestic demand could help cushion the impact of higher energy costs.
It identified that land transport, mining, agriculture, chemicals, rubber and plastic products among the sectors most directly exposed to higher energy prices.
These industries play a critical role in the economy and serve as key inputs for several downstream sectors.
In addition, pharmaceuticals, electronic products, processed food and metal products are likely to experience higher input costs if energy prices remain elevated.
However, sectors such as financial services, real estate and professional services face relatively limited direct exposure to energy related cost pressures despite accounting for a significant share of economic output.
Moreover, the report highlighted measures that could help mitigate the impact of rising energy prices.
Government support for fertiliser imports and domestic production, along with continued policy interventions, could help reduce pressure on the agriculture sector, it said.
According to Crisil, India's economy has benefited significantly from structural reforms and stronger corporate balance sheets in recent years, which should provide a buffer against external shocks.
Despite higher energy prices, the country's long-term economic fundamentals remain intact.
India's broad-based growth drivers are expected to support economic resilience in the face of global uncertainties, according to Crisil.
— IANS
Reader Comments
India's structural reforms are impressive, especially the corporate balance sheet improvements. But honestly, being from the UK, I've seen how volatile these energy markets can be. Diversifying energy sources is key—hoping India invests more in renewables alongside these policies.
I’m cautiously optimistic 🙏. Our domestic demand has been a bright spot, especially during festivals. But the article rightly points out that agriculture and plastics are directly hit—those are our bread and butter sectors. Hope the government’s fertiliser support reaches farmers on time.
Interesting take from Crisil. As someone in the pharma sector, input cost pressure is real—we rely on crude-based raw materials for some drugs. But I appreciate that financial services and real estate are relatively safe. Still, we need more concrete steps, not just policy interventions.
From a global perspective, India’s resilience is noteworthy. But I wonder if this report is too rosy—West Asia tensions could spike again, and then "strong fundamentals" might be tested. Still, the diversified economy angle gives India an edge over oil-dependent peers.
Structural reforms like GST and IBC have indeed strengthened our economy. But the common man feels the pinch at the pump even now. If energy prices stay high, it’ll trickle down to food and transport costs. Let’s hope the government uses this buffer wisely.
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