Washington: India faces rising risks from global conflict and energy price volatility, but enters the new financial year with a strong macroeconomic position, Chief Economic Advisor V. Anantha Nageswaran said on Wednesday.
Speaking at the US-India Economic Forum 2026, Nageswaran said the government’s 6.5 per cent GDP growth forecast may be conservative, but cautioned that “we shouldn’t underestimate or understate the wide range of uncertainty that prevails.”
He said global tensions are affecting India through four key channels: higher energy prices, disruptions to trade, rising logistics and insurance costs, and weaker remittance flows.
“It is not purely about the price of oil… it is about the commodities that matter,” he said, noting that India’s landed crude cost rose to about $113 per barrel in March.
He warned that even if conflict eases, economic normalisation could take longer. “It’s one thing for the conflict to end… but another thing for restoration of normalcy in energy markets,” he said.
Remittances could also come under pressure. India received $124 billion in 2024–25, with about half from the Gulf. Disruptions there could cut inflows by $5–10 billion, he said.
Despite these risks, Nageswaran said India’s fundamentals remain strong. “We are facing them with a position of macroeconomic strength,” he said.
He pointed to sustained growth, moderate inflation and improving fiscal balances. India’s GDP growth for the year ending March 2026 is estimated at 7.6 per cent, with momentum across agriculture, manufacturing and services.
On trade, he said India has expanded its global engagement through new agreements. “The Indian market is open for foreign goods and services,” he said, citing deals with the UK, European Union and the United States.
He said these agreements would help cushion external shocks and strengthen India’s role in global value chains.
Nageswaran also highlighted rising public investment. Capital expenditure has grown more than threefold in recent years, supporting improvements in infrastructure, logistics and connectivity.
He flagged structural challenges, especially the impact of artificial intelligence on jobs. “The full answer lies in being able to create jobs in AI-insulated sectors,” he said.
He stressed the need to expand vocational training and create employment in sectors such as healthcare, hospitality and elder care.
Looking ahead, he said India must build “strategic buffers” in key commodities to reduce vulnerability to supply shocks.
The US-India Economic Forum, organised by the US-India Strategic Partnership Forum, brought together policymakers and industry leaders to discuss bilateral ties and economic challenges.
India is the world’s fourth-largest economy and is targeting a $5 trillion economy in the coming years.
Global risks have risen due to geopolitical tensions and energy market disruptions. But India has maintained stability through strong reserves, steady reforms and resilient domestic demand.
(IANS)
