The government remains confident about India's growth outlook despite rising fuel and fertiliser import costs triggered by the Middle East crisis. Official sources stated that GDP momentum remains intact, domestic consumption is holding up, and there is no immediate need for additional borrowing.
Budget and Fiscal Targets
Sources told news agency PTI that the FY27 Budget had already factored in global uncertainties, including tariff-related risks. At present, there is no proposal to seek supplementary grants or raise extra borrowing during the upcoming monsoon session of Parliament. On the fiscal front, the government continues to target a fiscal deficit of 4.3% of GDP for the current financial year.
Disinvestment and Asset Monetisation
Regarding disinvestment, a source said, "DIPAM and DPE have a year-long pipeline and also a medium-term outlook of disinvestment and asset monetisation. I would hope the budgeted Rs 80,000 crore under this head exceeds BE and both the departments are working on it." The IDBI Bank disinvestment will move ahead.
Macroeconomic Reassessment
The government plans to reassess macroeconomic conditions in July after receiving April-June quarter growth data and a clearer picture of the impact of El Nino on the monsoon. According to sources, the growth momentum seen in the January-March quarter of FY26 has continued into the first quarter of FY27, with no adverse impact on remittances so far. GST collections remain robust, high-frequency indicators are showing resilience, and private investment is gathering pace, citing recent data released by CII.
Reforms and FDI
Stressing that the government's "reform express" will continue, sources said additional measures to attract foreign direct investment (FDI) are in the pipeline, and there is no proposal to curb capital outflows.
Impact of Middle East Crisis
Officials acknowledged that the Middle East crisis has increased pressure on subsidy and energy bills. The fertiliser ministry has sought a 100% increase in fertiliser subsidy allocation for the current fiscal amid rising global fertiliser prices. The Budget has provided Rs 1.77 lakh crore towards fertiliser subsidy for FY27. The government has extended support of Rs 1.23 lakh crore to oil marketing companies (OMCs) to keep petrol and diesel prices unchanged for 78 days after the outbreak of the West Asia crisis. Following that period, OMCs have started increasing fuel prices in phases but are still incurring losses of around Rs 650 crore per day by selling fuel below prevailing international crude-linked costs.
