India’s ability to absorb high energy costs has strengthened significantly over the years, with the economy managing severe oil price shocks while sustaining robust growth, according to industry body ASSOCHAM. 

An analysis by the chamber covering the period from 2000-01 to 2025-26 found that India has increasingly demonstrated resilience to elevated crude oil prices without derailing its growth trajectory. 

Strong growth despite high crude prices 

According to ASSOCHAM, some of India’s strongest growth years came during periods of moderate to high crude prices. In 2022-23, India’s GDP grew 7.6% even as the average price of the Indian crude basket stood at $93 per barrel. In 2023-24, growth remained strong at 7.2%, with average crude prices at $82 per barrel. 

Even during 2011-14, when oil prices remained above $100 per barrel, India’s GDP growth ranged between 5.2% and 6.4%. By contrast, the sharpest contraction of -5.78% came in 2020-21, when crude prices were among the lowest in two decades at below $45 per barrel, due primarily to the Covid-19 pandemic. 

“India’s growth story is largely driven by domestic consumption, which supports the supply side through factory expansion, higher employment and rising income levels, creating a virtuous cycle and strengthening economic resilience,” said Nirmal Kumar Minda, President, ASSOCHAM. He added that sustained government spending on infrastructure and rising capital expenditure have helped cushion the economy against external shocks. 

GDP growth seen above 7% 

ASSOCHAM said India’s economic momentum is expected to continue in 2026-27, supported by strong consumption demand, stable exports and increasing capital investment. 

The industry body projected GDP growth of above 7% in FY27, higher than the Reserve Bank of India’s estimate of 6.9%. 

“India’s growth story cannot be unsettled by geopolitical disturbances. The projected GDP growth of 7 per cent, even amid global tensions, reflects the strength of the underlying economy,” Minda said. 

Inflation remains under control 

On inflation, ASSOCHAM said the trajectory remains benign. Consumer Price Index (CPI) inflation stood at 3.40% in March 2026, compared with 3.21% in February 2026, marking a modest rise of 0.19 percentage points. 

The chamber said the monthly increase was lower than inflation trends seen in advanced economies such as the US, Germany, and France. 

Stronger macroeconomic fundamentals 

India’s resilience has been supported by stronger foreign exchange reserves, trade diversification, fiscal policy tools and diversified revenue streams, enabling it to absorb crude price volatility more effectively. 

ASSOCHAM also credited post-Covid reforms such as the Production Linked Incentive (PLI) scheme, easing of compliance requirements for businesses, and policy support for MSMEs for strengthening economic fundamentals. 

Looking ahead, the chamber expects the RBI’s repo rate to remain stable in the 5-5.25% range, although short-term inflation fluctuations may persist. A stable interest rate environment, it said, would further support India’s growth momentum.