India to grow 6.6-6.8% in FY27; global energy market normalisation to aid growth, inflation: EY

India's economy is expected to grow at 6.6-6.8% in the current fiscal, and a gradual normalisation of global energy markets is expected to ease supply-side pressures, improve cost conditions, and support growth and inflation outcomes during FY27, EY Economy Watch said on Friday.

Considering the recent geopolitical developments, if global crude prices settle at relatively lower levels and shipments through the Strait of Hormuz normalise, the positive momentum of India’s growth prospects is likely to be restored, the report said.

"We expect, in FY27, real GDP growth at 6.6-6.8%, CPI inflation at 4.5%, nominal GDP growth at 12.5%, Government of India fiscal deficit at 4.4% and current account deficit at 1.5% of GDP," EY Economy Watch said.

It said India continues to demonstrate strong economic resilience despite external uncertainties, underpinned by robust domestic economic fundamentals and sustained private sector activity.

A gradual normalisation of global energy markets is expected to ease supply-side pressures, improve cost conditions, and support both growth and inflation outcomes during FY27, it said.

Inflation is expected to remain broadly manageable at around 4.5%, supported by moderating commodity prices and improving supply conditions.

A moderation in global energy prices and improved external conditions are expected to support the external sector, with the current account deficit projected at 1.5% of GDP.

The report said high-frequency indicators continue to reflect underlying economic strength, with healthy manufacturing and services activity, steady credit growth, improving industrial output, and resilient automobile demand.

"India’s medium-term growth prospects remain supported by strong domestic drivers, with domestic consumption, investment, and services sector performance continuing to play a central role in economic expansion," the report said.

The country’s well-established petroleum refining ecosystem remains a key strength, enhancing energy security, supporting exports of petroleum products, and helping mitigate external vulnerabilities.

"Increased focus on infrastructure development, supply chain resilience, and strategic preparedness may help strengthen India's ability to navigate future geopolitical and economic uncertainties," the report said.