India’s real GDP growth could erode by around 1 percentage point, while consumer price index (CPI) inflation could rise by approximately 1.5 percentage points from their baseline estimates of 7 percent and 4.0 percent, respectively, in FY27, as per the Ernst & Young report.The report highlighted that the ongoing conflict in the Middle East has significantly disrupted global crude oil and energy markets by affecting supply, storage, transportation, and prices. The price of the Indian crude basket had surged to USD 147.2 per barrel by 24 March 2026 from an average level of USD 69 per barrel. during February 2026.Even if the conflict is resolved in the near term, some of these disruptions may take considerable time to normalise. The magnitude of these effects may depend on the duration and intensity of supply-side disruptions and the pace at which production and transport logistics normalise.Meanwhile, as outlined by the report, India, which imports nearly 90 percent of its crude oil requirements, is also highly dependent on imports of natural gas and fertilisers. Consequently, the Indian economy is particularly vulnerable to such external shocks, with the adverse effects likely to cascade across multiple sectors through strong forward and backward linkages with crude oil and energy.As per the report, early assessments show that private sector activity in India may have slowed down in March 2026. Considering the Flash PMI levels for March 2026 released on 24 March 2026, PMI manufacturing fell to a four-and-a-half-year low of 53.8, and PMI services eased to 57.2 owing to softer domestic demand weighing on new orders, which rose at the slowest pace in more than three years.It further added that the cost pressures intensified as reflected by input costs and selling charges that increased at the fastest rates in 45 and seven months respectively.