ISLAMABAD: Experts warn India may face a recession in the 2026-27 fiscal year due to increasing economic vulnerabilities.
The combination of rising oil prices, heavy dependence on foreign energy imports, and external pressures has raised concerns about slowing growth and a widening current account deficit.
Economic analyst Debanchu Moan, professor at Jindal Global University, said that India’s macroeconomic fundamentals are under strain.
“Anything below 6% growth in the Indian context effectively amounts to a deep recession,” he told The Wire during a podcast.
Rising oil costs and disruptions in key trade routes have pushed the Indian rupee past 95 to the US dollar, with some forecasts suggesting it could reach 100 in the coming weeks.
Experts point to the ongoing tensions in the US-Israel-Iran conflict as an indirect factor exacerbating India’s economic challenges. Oil supply disruptions, blocked shipping lanes, and inflationary pressures are weighing heavily on India’s balance of payments.
“India’s dependence on oil imports from West Asia and its limited strategic petroleum reserves leave it particularly vulnerable,” Moan added.
The economist also highlighted policy missteps, noting that previous favorable deals, such as discounted oil imports from Iran, were discontinued under US pressure, costing India billions of dollars annually.
Additionally, commitments to increase trade with the US while reducing imports from Russia have shifted India’s energy dependence in ways that may prove unsustainable.
“India has a 30-day window to stabilize its balance of payments and implement effective course corrections,” Moan said.
“Without strategic planning and a clear multi-aligned foreign policy, the country risks worsening macroeconomic pressures, including inflation, trade imbalances, and slowing GDP growth.”
The government has been urged to manage capital flows carefully, maintain a strategic reserve buffer, and reassess its energy import strategy to avoid a deeper economic crisis.
.jpg)
