India's FY26 GDP climbs to 7.8% amid West Asia oil price surge

India’s economy expanded 7.8% year‑on‑year in the January‑March quarter of FY 2026, with full‑year growth revised up to 7.7%, comfortably beating forecasts. The surge was driven by strong services, robust private investment and solid construction activity.

Analysts note that the growth occurred despite a sharp rise in global oil prices after the West Asia conflict pushed Brent crude to around $100 a barrel and disrupted supplies through the Strait of Hormuz, which accounts for about 60% of India’s oil imports. Higher fuel costs are straining household budgets and widening the import bill, raising concerns about inflation and the rupee’s depreciation.

Risk assessments warn that elevated energy prices, a potentially weak monsoon and the spectre of stagflation could curb momentum in FY 27, with growth forecasts lowered to roughly 6.5‑6.6%. Nonetheless, domestic demand remains resilient, and policymakers are counting on RBI liquidity management, capital‑gain tax cuts for foreign investors and continued infrastructure spending to cushion the slowdown. The outlook hinges on how quickly oil price pressures ease and whether monsoon and global growth conditions improve.