India’s economic growth remains resilient, and fears that rising crude oil prices could significantly derail the economy are overblown, according to Neelkanth Mishra, the World Bank’s newly appointed Indian executive director.In an interview with ANI, Mishra said India is better placed than many other energy-importing economies to absorb higher oil prices without suffering significant damage to growth.Mishra, who is also a member of the Prime Minister’s Economic Advisory Council, said India’s economy grew by 7.1% in FY25 despite fiscal and monetary tightening.He added: “If our growth was 7.1% despite the fiscal and monetary tightening, this means that without that, growth would have been higher.”According to Mishra, the combination of improving credit growth and a less restrictive fiscal stance suggested that the economy was expanding at an annual pace of more than 8% through February-March 2026.He pointed to indicators such as 29% year-on-year growth in automobile sales in May, strong mall footfall and sales, and high single-digit growth in cement demand as evidence of underlying economic strength.“You cannot build a stock of cement… Everything that is purchased is consumed,” he said.
Mishra said India’s exposure to oil shocks is less than often portrayed because domestic oil marketing companies also benefit from refining operations.Explaining the dynamics, he said that while higher crude oil prices are driving up costs, stronger refining margins partially offset the impact.With crude oil currently trading at $94-95 per barrel and diesel refining margins declining, “India does not need to raise fuel prices again,” Mishra said.He added that concerns about large implicit fuel subsidies are misplaced.“There is no need for the feared implicit support of Rs 20-30 per litre; an increase of Rs 8 per liter is sufficient as oil prices fall due to release of stocks by China and the US,” he said.Mishra estimated that an oil price of $100 per barrel would constitute a burden on growth of about 2%, but he said that the impact would not be enough to derail the economy.He compared the effect to an airplane facing headwinds.Meanwhile, he said support measures such as fertilizer price caps may not be needed by March 2027 if oil prices move towards the $80 per barrel level indicated by futures markets.According to Mishra, the economy can accelerate again if crude oil prices moderate.While acknowledging that energy prices remain a risk, he said India’s refining surplus, strong domestic demand and easing fiscal and monetary headwinds should help growth remain in the 7.5-8% range even if crude oil prices remain high.“The biggest challenge is managing the narrative until the data proves its resilience,” he said.