India Seen Growing Above 8% Despite West Asia Oil Worries: PM-EAC Member

A member of the Prime Minister's Economic Advisory Council (EAC) said on 8 June 2026 that fears about rising crude oil prices hurting India's economy are driven more by perception than by the actual data. The official, who has also been named India's Executive Director at the World Bank, argued that India is better placed than most other oil-importing countries to absorb costlier crude without a sharp fall in growth, even as tensions continue in West Asia.

He pointed out that the economy expanded by 7.1% in FY25 (the financial year running April 2024 to March 2025) even though both monetary policy and fiscal policy were tight at the time. "Monetary tightening" means higher interest rates that slow down bank lending, while "fiscal tightening" means the government spending carefully to shrink its fiscal deficit (the gap between what it earns and what it spends). According to him, growing 7.1% under such restrictive conditions proves the economy's underlying strength, and with credit now picking up again, the annual pace was likely crossing 8% by February-March 2026.

To back this view, he cited several on-the-ground signs of demand: car sales rising about 29% year-on-year in May 2026, heavy footfall and spending at shopping malls, and cement demand growing at a high single-digit rate. He stressed that cement is a reliable indicator because it cannot be stored as inventory for long, so whatever is bought is actually being used in construction. Such strong demand, he said, does not match the gloomy commentary about the economy.

On oil itself, he explained that India is less exposed to price shocks than people assume because Indian oil companies also run refineries and earn more when refining margins (the profit from turning crude into fuels like diesel) rise. He gave an example: if crude jumps from USD 70 to USD 100 per barrel and the diesel crack spread widens, the landed cost for many countries could touch USD 150, but for India it would stay closer to USD 120 thanks to refining gains. He added that crude had since eased to around USD 94-95 per barrel after the United States and China released stocks, so no further fuel price hikes were needed and the existing cushion of about Rs 8 per litre was enough. Even if crude stays high, he expects growth of roughly 7.5-8%, helped by strong domestic demand and India's role as a refining hub. The real challenge, he said, is changing public perception until the data clearly shows resilience.

For exam preparation, this story connects the Economic Advisory Council (a body that advises the PM on economic matters) with core concepts often tested in UPSC, banking, and state PCS exams: GDP growth, fiscal versus monetary tightening, the fiscal deficit, crude oil import dependence, refining margins and crack spreads, and the link between India and the World Bank. Remember the FY25 growth figure (7.1%), the projected 8%-plus pace, and why cement and car sales are used as demand indicators.