Page 20 - FIPI - Policy & Economic Report May 2026

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Despite these developments, uncertainties remain regarding the long-term durability of the agreements,
as several commitments are still preliminary and structural issues relating to tariffs, technology
restrictions, and geopolitical competition continue to pose risks to trade stability.

6. Indian Economy

India GDP position

The United Nations has revised downward India's economic growth forecast for 2026 to 6.4 % from its
earlier projection of 6.6 %, citing global uncertainties and economic shocks arising from the ongoing West
Asia crisis. As per the report released by the UN Department of Economic and Social Affairs (UN DESA),
India, however, remains one of the fastest-growing major economies and is expected to grow at 6.6% in
2027.

Inflation in India

India’s retail inflation increased marginally to 3.48% in April 2026 from 3.40% in March, remaining below
the Reserve Bank of India’s (RBI) medium-term target of 4 % despite rising global energy prices and supply-
side risks. The increase was primarily driven by higher food prices, while fuel price pressures remained
partly contained due to limited pass-through to retail consumers.

The inflation outlook, however, has become increasingly uncertain amid elevated crude oil prices,
weakening rupee conditions, and geopolitical tensions affecting global energy markets. Rising fuel,
transportation, and logistics costs are expected to increase cost-push inflationary pressures over the
coming months, particularly if higher global crude prices are transmitted to domestic retail fuel prices.

The RBI has projected CPI inflation at 4.6 % for FY2027, while core inflation is estimated at around 4.4 %.
Market participants and economists have also cautioned that continued volatility in energy markets and
weather-related risks to food prices could limit the scope for further monetary easing and may require a
more cautious policy approach going forward.

National Level Indices

? Year-on-year inflation rate based on All India Consumer Price Index (CPI) with base year 2024 for
the month of April, 2026 over April, 2025 is 3.48%(Provisional). Corresponding inflation rates for
rural and urban are 3.74% and 3.16%, respectively.

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