Kamal Ghorui
India’s economy is projected to expand by 7.6% in the current fiscal before moderating to 6.1% in 2026-27, the Organisation for Economic Cooperation and Development (OECD) said in its interim Economic Outlook report, PTI reported.The multilateral body said the evolving conflict in the Middle East has “human and economic costs” for countries directly involved and could test the resilience of the global economy by disrupting energy supplies and raising commodity prices.“The decline in (US) tariffs should support growth in India, though gas rationing will disrupt some production activities and fiscal support is expected to fade, with growth easing from 7.6 per cent in fiscal year (FY) 2025-26 to 6.1 per cent in FY 2026-27 and 6.4 per cent in FY 2027-28,” the OECD said.According to the report, disruption of shipments through the Strait of Hormuz and damage to energy infrastructure have triggered a surge in energy prices and affected the global supply of commodities, including fertilisers.The OECD also warned that inflationary pressures could rise as the deflationary effects of earlier food and energy price shocks recede. It projected inflation to increase from 2% in FY 2025-26 to 5.1% in FY 2026-27 before easing to 4.1% in FY 2027-28.Among emerging-market economies, India may need to raise policy rates temporarily in the second quarter of 2026 to counter stronger inflationary pressures, the report said.The OECD noted that US bilateral tariff rates have declined following a US Supreme Court ruling against levies imposed under the International Emergency Economic Powers Act. While this has resulted in significant tariff reductions for several emerging-market economies, including India, the overall US effective tariff rate remains higher than levels seen before 2025.Globally, growth is expected to soften to 2.9% in 2026 before improving slightly to 3% in 2027.“The energy price surge and the unpredictable nature of the evolving conflict in the Middle East will raise costs and lower demand, offsetting the tailwinds from strong technology-related investment and production, lower effective tariff rates and the momentum carried over from 2025,” the OECD said.
