Prolonged Iran crisis could affect rupee, CAD, inflation, but reforms, trade deal raise FY27 GDP outlook to 7-7.4%: Govt

India’s reform momentum and recent free trade deals have raised its FY27 growth outlook to 7-7.4%, up from the 6.8-7.2% projected in the Economic Survey this year, but a prolonged Iran crisis could have implications for exchange rate, current account deficit, capital flows, inflation and sectors like fertilizers and petrochemicals that are dependent on imported liquified natural gas (LNG) and crude oil, the Union finance ministry said.

The ministry’s monthly economic review released on Friday said the developments around the Iran war—disrupted shipping through the Strait of Hormuz and damage to key energy infrastructure assets in West Asia—mark a pivotal escalation echoing the 1991 Gulf War oil shocks, potentially reshaping global energy geopolitics for decades.