Indian Economy before the War

At the beginning of the year 2026, the Indian economy was in a sweet spot. GDP for FY26 was estimated to grow by 7.6%; CPI inflation was running at 2.75%; fiscal deficit and current account deficits were well within targets of 4.4% and 1%, respectively; forex reserves at around $720 billion were ample, and Brent Crude was trading at around $62. RBI Governor described the situation as a ‘rare Goldilocks scenario.’ The fiscal and monetary stimulus provided by the government and the RBI, respectively, in 2025 had boosted the earnings growth prospects for FY27, and Nifty appeared to be resilient, trading around 26000 levels. However, the West Asia conflict and the consequent energy crisis have changed the Indian macro scenario from Goldilocks to vulnerable.