Crude oil near $120, to intensify headwinds for economy, but tailwinds likely

SENSEX 73,123.83

 -125.56

NIFTY 22,600.00

 -87.65

CRUDEOIL 9,783.00

+ 299.00

GOLD 142,160.00

 -1,149.00

SILVER 195,900.00

 -3,699.00

SENSEX 73,123.83

 -125.56

NIFTY 22,600.00

 -87.65

NIFTY 22,600.00

 -87.65

CRUDEOIL 9,783.00

+ 299.00

CRUDEOIL 9,783.00

+ 299.00

GOLD 142,160.00

 -1,149.00

'; } document.getElementById("lgdv").innerHTML = htmlElements; } function numberformat(i) { return Number(parseFloat(i).toFixed(2)).toLocaleString('en', { minimumFractionDigits: 2 }) } async function gatherResponse(response) { const { headers } = response; const contentType = headers.get('content-type') || ''; if (contentType.includes('application/json')) { return await response.json() } return response.text(); } function getWidth() { if (Math.max(document.body.scrollWidth,document.documentElement.scrollWidth,document.body.offsetWidth,document.documentElement.offsetWidth,document.documentElement.clientWidth) > 991) { document.getElementById("mob").style.display = "none"; document.getElementById("lgdv").style.display = "block"; } else { document.getElementById("mob").style.display = "block"; document.getElementById("lgdv").style.display = "none"; } } getWidth(); THIS AD SUPPORTS OUR JOURNALISM. SUBSCRIBE FOR MINIMAL ADS.THIS AD SUPPORTS OUR JOURNALISM. SUBSCRIBE FOR MINIMAL ADS.

Union Budget has estimated fertiliser subsidy at ₹1.70 lakh crore. However, according to Controller General of Accounts (CGA), outgo has already crossed ₹1.03 lakh crore in first five months

By Shishir Sinha

Updated - October 25, 2026 at 04:16 PM. | New Delhi

With brent crude nears $120 as escalating Saudi-Houthi tensions, Indian economy sets to face severe headwinds. However, economists feel there are tailwinds too which could provide some comfort to government finance managers.

Union Budget has estimated fertiliser subsidy at ₹1.70 lakh crore. However, according to Controller General of Accounts (CGA), outgo has already crossed ₹1.03 lakh crore in first five months.

Recently businessline reported, quoting senior government official, that total outgo is likely to cross ₹3 lakh crore or even touch ₹3.5 lakh crore. At the same time, though prices of domestic LPG cylinder revised upward, there is still under recovery of around ₹327 a cylinder.

According to, D K Srivastava, Chief Policy Advisor at EY India, given ongoing crisis in West Asia, crude prices are likely to remain elevated in the range of $115 to $120/bbl. for some time.

This will have an adverse impact on real GDP growth whereas CPI inflation is likely to increase. The RBI’s projections for the second half of 2026-27 were based on a baseline crude price assumption of $95/bbl.

“A sustained increase by a margin of $20/bbl., in global crude prices compared to the baseline assumption, for the remaining part of the fiscal year is likely to result in a marginally lower real GDP growth for 2026-27 from 7.1 per cent to 7 per cent whereas CPI inflation is likely to be higher by a margin of about 0.5 per cent points, from 5.2 per cent to 5.7 per cent,” he said. Further, this implies that the increase in nominal GDP growth would increase whereas real GDP growth would be lower as compared to RBI’s October 2026 projections. “This will have a positive impact on GoI’s tax revenues if existing tax buoyancies are realised,” he added.

Sunil Kumar Sinha, Professor of Economics at Institute for Development and Communication estimated that possible increase in fertiliser subsidy can widen the 2026-27 fiscal deficit by 0.4-0.5 per cent of GDP.

However, there are channels that can cushion this impact. Firstly, “the Reserve Bank of India has transferred a bumper dividend of ₹2.87 lakh crore.

Secondly, tax collections have been buoyant clocking a growth of nearly 13 per cent by mid-September 2026. Thirdly, disinvestment and monetization, which had mostly missed the budget targets in the past, is doing well this fiscal.

Close to 70 per cent of the full-year target has been realized by end August 2026. And lastly, the availability of ₹1 lakh crore economic stabilisation fund created specifically for absorbing global macroeconomic shocks. Therefore, “fiscal deficit target of 4.3 per cent of GDP still appears achievable and if at all there is slippage then it will not go beyond 4.4–4.5 per cent of GDP,” he said.

D K Pant, Chief Economist at India Ratings & Research is cautiously optimist. “There will be impact on account of higher fuel prices as under recovery of oil marketing companies on petrol, diesel and LPG to go and then higher outgo on account of fertilser subsidy. However, with tax receipts (barring central excise), non-tax revenue along with possible higher collection higher than budget estimates from disinvestment and asset monetization, overall fiscal arithmetic unlikely to see significant,” he said.

Published on October 25, 2026

THIS AD SUPPORTS OUR JOURNALISM. SUBSCRIBE FOR MINIMAL ADS. THIS AD SUPPORTS OUR JOURNALISM. SUBSCRIBE FOR MINIMAL ADS. THIS AD SUPPORTS OUR JOURNALISM. SUBSCRIBE FOR MINIMAL ADS. THIS AD SUPPORTS OUR JOURNALISM. SUBSCRIBE FOR MINIMAL ADS.Sign into Unlock benefits!

• Access 10 free stories per month
• Get notified by email for early preview to new features, discounts & offers