OECD Raises India Inflation Forecast To 5.1%, Flags Energy Crisis Risks

The Organisation for Economic Co-operation and Development (OECD) has significantly revised its economic outlook for India, raising the FY27 inflation forecast by 170 basis points to 5.1%. The revision is attributed to the global energy crisis, which is expected to spur inflationary pressures. Consequently, the OECD predicts that the Reserve Bank of India (RBI) may raise interest rates as early as April or June. Additionally, India's FY27 GDP growth forecast has been lowered by 10 basis points to 6.1%. Energy expert Narendra Taneja highlighted India's extreme vulnerability, noting an 89% dependence on oil imports and 56% on gas. Taneja expressed particular concern over LPG supply for 340 million consumers, emphasizing that while other compromises are possible, household cooking energy is non-negotiable. He noted that while India is hopeful for the continued functioning of the Strait of Hormuz, the economics of energy will remain a major challenge for the next three to six months, requiring rigorous policy planning to protect consumers and taxpayers.