A surge in global crude oil and natural gas prices amid the West Asia conflict is likely to complicate India's fiscal position in FY2027, potentially increasing subsidy burdens and pressuring revenues, ratings agency ICRA said. Crude prices have more than doubled from pre-crisis levels, raising input and logistics costs and disrupting supplies, including key fertiliser inputs, the agency said. ADVERTISEMENTThis could lift the government's fertiliser and LPG subsidy outgo while weighing on corporate tax collections, refining margins and dividend receipts. ICRA believes that the Economic Stabilisation Fund (ESF) could be utilised to absorb a portion of the aforesaid revenue/expenditure shock to the GoI's fiscal situation. If the conflict keeps the energy prices elevated for a prolonged period, it would pose upside risks to the central government's FY2027 fiscal deficit target of 4.5 per cent of GDP (as per 2022-23 GDP series).

Source: The Telegraph March 26, 2026 14:33 UTC