New Delhi: S&P Global Ratings on Thursday said India is expected to grow at 6.3 percent even if the oil price averages USD 130/barrel in the current fiscal year amid the ongoing West Asia crisis. It also said that the fiscal strain from the energy price shock is unlikely to impact India's sovereign credit rating, as India has the "political commitment to fiscal consolidation" over the long term.

Follow The PSUWatch Channel on WhatsApp

S&P Director, Sovereign and International Public Finance Ratings, Yee Farn Phua said considering a baseline assumption of crude at USD 85/barrel, India will grow 7.1 percent in 2026-27.

"That's still a very strong number compared to any major economies out there. Even in the alternate scenario, if I were to say, USD 130/barrel average, we are still looking at the growth at 6.3 per cent... that is still going to be the highest among major economies," Phua said at a webinar. S&P said energy supply disruptions that lead to fuel rationing or shortages of related products, such as fertilisers, would be a risk.

India, S&P said, could see a weaker current account balance, higher costs for producers squeezing margins, higher consumer prices reducing purchasing power, and fiscal strains, as the government steps in to cushion some of the shock for consumers.

Follow Energy Watch on LinkedIN

"The government's fiscal consolidation efforts continue to be very strong... India has a lot of physical flexibility on the spending side, especially on infrastructure. So, in case some of the areas where they have to spend more, for example, the subsidy bill, they might cut in other places to make sure that they will still hit the fiscal deficit target," Phua added.

(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Google News. Click here to follow. Also, join PSU Watch Channel in your Telegram. You may also follow us on Twitter here and stay updated.)