India Economy Faces Big Test Amid Global Energy Crisis & War

Added: 2026-05-18

[00:00:00]I want to deal with the impact of the West Asia war on India's growth outlook.

[00:00:06]Now, we're already seeing from bodies like Moody's, the OECD, Ernst & Young, multiple bodies lowering India's growth estimates. You've got some of those on your screen right now. Moody's, for example, is expecting India's growth numbers to come down about 0.8% from 6.8 to 6. Uh OECD is projecting an even bigger fall in India's growth numbers by about 1 and 1/2 uh percent from 7.6 to 6.1. The economic survey, uh and this of course happened much earlier, uh projected a much smaller reduction.

[00:00:39]Morgan Stanley is the outlier projecting an increase. They're imagining that the war gets over in June and then things get better after that. But even as you go on and look at all the numbers that have come out from different brokerages, they're projecting uh a very big downside to the Indian economy at least around about a percent or so.

[00:01:00]Ashima Goyal, from everything that we've seen so far and what is already visible to us, leaving aside shocks that may uh still be down the corner, what impact do you think what's already happened has on the growth that we would have otherwise had without this war?

[00:01:15]Yes, again, going back to the Ukraine episode where oil prices stayed high for 1 year, growth fell from 9 to about 7%, no?

[00:01:24]So here, if it is 2 months, 3 months, 6 months, we we could I think it's about 1% loss in growth is is a is a realistic figure for the for the present. But then you must remember that we are coming from a really high growth angle.

[00:01:38]Uh and and therefore it's not doesn't mean stagnation or anything like that.

[00:01:43]They're still doing very well. And also our strength of of diversity as a counter to these kind of shocks.

[00:01:51]So and and therefore, you know, the the whole story about the stock market and inflows and how do you attract more? But we have many other things we can do such as improving our current account deficit, increasing productivity and consumption, other kinds of I think our strength during after the major polycrisis that we faced in the last few years was that even in the structural reform that improved our long-run outcome. We should do the same thing here. A big strategy we can follow is green substitution and this will affect us in the long run and it will really help us reduce our oil vulnerability. It's already come down quite a bit, but you know there's political resistance to some kinds of reforms that you need power distribution etc. We are already seeing some of those things being pushed through because of this West Asia crisis. So in the long run if you're able to do the right things, it's it's going to affect our growth positively not negatively.