New Delhi, March 12 (NationPress) The renowned global financial services company, Nomura, has estimated that India’s economy is set to expand by 7 percent in the fiscal year 2026-27 (FY27), showcasing resilience despite escalating geopolitical tensions in West Asia and worries regarding rising energy costs.

Nonetheless, the consultancy has made a minor downward adjustment to its previous growth forecast, cautioning that ongoing conflicts in the area could exert pressure on inflation and the nation’s external balance.

The analysis, authored by Sonal Varma, Chief Economist for India and Asia excluding Japan at Nomura, in collaboration with economist Aurodeep Nandi, highlighted that the geopolitical situation is driving up energy prices throughout the region. Elevated fuel costs might lead to inflationary pressures in several Asian economies, including India.

Nomura has increased its inflation prediction for India in FY27 to 4.5 percent, up from an earlier estimate of 3.8 percent. The firm also anticipates that the current account deficit (CAD) will escalate to 1.6 percent of GDP, reflecting a rise of 0.4 percentage points from earlier evaluations.

According to the economists, preliminary data for the first quarter of calendar year 2026 indicates that both consumption and industrial activities in India remain robust. However, they noted that exports and government expenditure appear to be lagging. Additionally, they warned that energy shortages, particularly disruptions in natural gas supplies due to geopolitical issues in West Asia, could impact industrial and service sectors in the country.

Despite these challenges, Nomura remains optimistic that India will continue to experience a cyclical economic rebound, bolstered by previous policy easing, structural reforms, rising wages, and diminishing trade tensions with the United States.

The economists project that India’s growth will decelerate slightly to 7 percent in FY27 from an estimated 7.6 percent in FY26, primarily due to possible spillover effects from global fuel supply disruptions.

Rising fuel prices are already impacting India, with the government recently raising liquefied petroleum gas (LPG) prices, and reports suggest natural gas shortages. Nomura anticipates that further price hikes will occur in sectors such as transportation, dining, hotels, and various services, potentially increasing overall inflation.

However, the report presumes that petrol and diesel prices will remain stable for the time being, with oil marketing companies absorbing the impact. If fuel prices are transferred to consumers, Nomura estimates that a 10 percent increase in oil prices could raise inflation by approximately 0.5 percentage points.