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The International Monetary Fund (IMF) revised India\u2019s 2026-27 economic growth forecast to 6.5 per cent in April. However, with the geopolitical uncertainties and with the energy ecosystem in a tailspin, this begs a question: How long will India maintain this growth rate?<\/p>
Former IMF Deputy Managing Director and Harvard University professor, Gita Gopinath,\u00a0explains how the coming days might look \u2013 but it is broadly based on a few factors.\u00a0<\/p>
Gopinath, in a conversation with India Today TV, agreed that if the Iran war gets resolved in the next few days, the impact will be minimal for India. \u201cThe impact could be much larger. In the case of India, two things offset each other. The Iran conflict was a negative shock for India. But on the other hand, because of the Supreme Court ruling and tariffs coming down from 50 per cent to 10 per cent, that was a positive event,\u201d said Gopinath.\u00a0<\/p>
MUST READ |\u00a0Gita Gopinath warns: The 3 Fs shock could hit Indian households soon!<\/strong><\/p> \u201cAnd so the combination was a bit of a wash and India’s economy is expected to grow at around 6.5 per cent for this fiscal year. But if there is much more disruption \u2013 and because India relies on the Middle East so much for oil, for its fertilizers \u2013 it’s not just about the price effect. If you just don’t have the supply and you have supply disruption, for example to LPG, that is going to complicate production in India and is going to be much, much more consequential,\u201d she said.<\/p> Gopinath said that if the Iran conflict stretches into May-June then there will be a much more serious impact on all economies.<\/p> \u201cThe rule of thumb right now, the expectation is that the price of oil is going to be around between $80 and $85 for the rest of the year, right? On average. On average, if that number gets to about $100, we’re talking about growth for the world economy, which is right now projected at 3.1 per cent dropping to 2.5 per cent. So, in that scenario, that’s a case when economies like India that rely on the Middle East heavily will have a much severe impact on their growth,\u201d said Gopinath. \u00a0<\/p> Watch the full conversation here:<\/em><\/strong><\/p>