Sep 01, 2026 12:55 pm IST

Opinion | Brent Hit $120, Rupee Sank, Hormuz Shut. How India Still Managed 7.8% Growth

How did an economy so exposed to imported oil pull this off?

Aditya Sinha Aditya Sinha Analyst

Between April and June 2026, the Strait of Hormuz ran at a fraction of its normal traffic. Brent touched $120 a barrel, the rupee fell to a record, and the producer price index for crude petroleum rose 58%. In that quarter, the Indian economy grew 7.8%, against the 7% the Monetary Policy Committee had pencilled in. Real GVA grew 8.2% and nominal GDP 10.3%. The United States grew 1.5% in the same quarter, China 4.3%, and Britain 0.4%.

It was a broad quarter, not a lucky one. Manufacturing grew 9.2%, construction 7.7%, services 10.0%. Gross fixed capital formation grew 11.9% in real terms, lifting the investment rate from 31.4 to 34.3% of GDP. Private consumption grew 7.1%. Exports grew 12% through a tariff wall and a war. Government consumption grew only 4.3%, so the private economy did the work. Listed company operating profit rose 19.3%, bank credit is growing 19.3%, net FDI doubled to $7.8 billion and the Centre's net tax revenue rose 17.8%.

Policy earned part of that. Retail petrol was held at Rs. 108.7 a litre and diesel at Rs. 98.1 through the shock, so the household consumption deflator was 2.6% when the import deflator exceeded 30%. The FCNR(B) swap window brought in $65.4 billion and stopped the rupee's slide becoming a rout. Foodgrain stocks at 4.7 times the buffer norm held cereal prices while the monsoon faltered. Last year's tax relief put money in households' hands as oil took it out. Five challenges now stand between the June quarter and a full year above 7%, and each has a fiscal and a monetary........

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