India’s FY27 growth forecast cut to 6.9% as energy crunch hits industry: ICICI Bank report
&imwidth=600&imheight=450&format=webp&quality=medium "India’s FY27 growth forecast cut to 6.9% as energy crunch hits industry: ICICI Bank report")
Representative image. Photograph: (Freepik)
The report said the revision was driven by the immediate impact of rising costs, even as supply chains are expected to stabilise in the near future. The revised growth estimates came with a significant change in the global energy landscape.
India's economic growth is likely to reach nearly 6.9 per cent for the 2027 fiscal year, a decrease from the previous forecast of 7.2 per cent. The prediction of a decline in growth rate came as energy supply disruptions began to affect industrial production. An ICICI Bank report indicated that the impact on India's economy will likely remain concentrated in March and April, along with a gradual decline in supply constraints expected in the next few months.
"We expect the impact on the economy to be concentrated in March and April, with gradual easing of supply in the coming months. This should have an impact on growth in Q4FY26 and Q1FY27. Given the impact is limited in the two quarters, we expect FY27 growth at around 6.9% as against 7.2% earlier," the news agency ANI cited ICICI Bank report.
The revised growth estimates came with a significant change in the global energy landscape. "Limited impact on growth is on account of the implicit assumption that oil prices settle around USD 85/bbl. With supply lines improving in the coming weeks in comparison to our earlier scenario of oil prices averaging USD 70/bbl," the report explained.
Rising geopolitical tensions affect India's growth path
The report said the revision was driven by the immediate impact of rising costs, even as supply chains are expected to stabilise in the near future. Before the recent geopolitical tensions, India’s economy was on a strong growth path, recording a year-on-year expansion of 7.8 per cent in December 2025. Data from January and February also indicated that core economic activity remained resilient.
"However, since the advent of war, the supply of energy products has been impacted, in particular LNG and LPG. Flash manufacturing PMI for March is already showing an impact with the index decelerating to 53.8 from 56.9 in the previous month," the report stated.
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However, industrial sectors are now facing the greatest strain from energy shortages. While the government has prioritised LNG and LPG supplies for households, this has led to reduced availability for industries. As a result, production in sectors such as fertiliser, metals, ceramics, restaurants and glass could be affected. The report highlighted a similar pattern in 2022, when high gas prices slowed manufacturing growth to 1.7 per cent in FY23, compared to 10 per cent in the preceding year.
