India dodges predicted ‘economic tsunami’, posts 7.7% growth

Opposition leader Rahul Gandhi warned of an imminent “economic tsunami” for India, citing rising fuel costs and a blocked Strait of Hormuz. Experts and media amplified the threat, predicting recession and high inflation.

Despite those warnings, India’s economy expanded 7.7% in FY 2026, the fastest growth among major economies. Inflation averaged 1.7% in April‑December 2025, and the Reserve Bank of India kept the repo rate at 5.25% while projecting 6.6% growth for FY 2027. Foreign‑exchange reserves rose to $682.3 billion, providing about 11 months of import cover.

India mitigated Middle‑East oil market disruptions by diversifying supplies, increasing purchases from Russia, the United States, Africa and other sources, and using strategic reserves. Temporary spikes in fuel and gas prices occurred, but the current‑account deficit remained manageable and the external sector stayed robust.