Impact of Iran war on Indian economy:GDP will be lower inflation will be higher in fiscal year 2027, say economists

The US and Iran have announced the completion of the much-awaited peace deal. The world rejoices in the resultant probable end of the West Asia conflict, but the geopolitical tension caused by the war that ran for more than three months will continue to hamper India’s economic growth. Already, the Reserve Bank of India (RBI), revised projections of Gross Domestic Product (GDP) downwards to 6.6% in the Financial Year 2026-27 (FY27) from erstwhile, 7.6%. Economists say that due to the ravaged caused by the Iran war, growth will lower in FY27 as compared to previous fiscal and inflation will be higher. Indian agricultural economist, Ashok Gulati says since the war has now stopped, there will be a mild rise in inflation in India. Currently, the annual rate of rise in prices of goods and services is just under 4%, but, he expects the metric to definitely touch 5% because of the ravages caused by the Iran war in the past.
India’s growth in the ongoing financial year will be lower than last year and inflation will be higher. -Indian agricultural economist, Ashok Gulati
Professor of Economics, Bharathidasan University, Venkatesh Athreya says that “Demand has declined, growth has collapsed and unemployment is very high especially among youth. Iran war had caused massive damage to a large number of developing countries. India was also severely affected. The Union government first claimed that the damage would be minimal and could be managed. But as soon as the elections to five state assemblies was over, it raised energy prices repeatedly. Petrol, diesel, natural gas all cost much more now. The government has passed on the entire burden to the people.” The country’s central bank had also upped inflation projections to 5.1% for FY27 from erstwhile 4.6%. S.Ravi, former BSE chairman and founder Ravi Rajan and company said that albeit, the peace deal has been announced, any renewed tension in the West Asia could prove to be detrimental for the Indian economy. West Asia conflict is not just a geopolitical concern. It has a direct bearing on the household budgets of millions of Indians. If crude oil remains elevated, consumers may witness a 5-10% increase in prices of essential commodities such as edible oils, packaged foods, fertilizers, dairy products, and agricultural inputs over the coming months. Transportation-dependent goods, including fruits and vegetables, might also become costlier. -S.Ravi, former BSE chairman and founder Ravi Rajan and company Items that become costly during Iran war: Airfares skyrocket: Flight ticket prices in India have surged by 25% to over 100% depending on the route, driven by jet fuel spikes and airspace rerouting due to the West Asia conflict. Dry fruits get expensive In Khari Baoli, Asia’s largest wholesale market of dry fruits, the prices of dry fruits and herbs surged by 20% to 50% during the Iran war as supply was disrupted. The prices of pistachios, prunes (dried plums), figs, and Mamra almonds coming from Iran had increased by 30% to 40%. Impact on gold silver According to the India Bullion and Jewellers Association (IBJA), 10 grams of 24-carat gold has decreased by ₹9,097 (5.7%) to ₹1,50,000. Previously, its price was ₹1,59,097 per 10 gm when the war had begun. Meanwhile, the price of one kilogram of silver has decreased by ₹16,900 to reach ₹2,51,000. Earlier, its price was ₹2,67,900 per kilo on 27 February. During the America-Iran war, gold became cheaper by 5.7% and silver by 6.3%. Oil prices are still 16% costlier The international standard, Brent crude oil prices were very volatile during the war. The initial surge in prices, driven by supply concerns, was followed by periods of decline as the global economy slowed down. Geopolitical tensions and potential disruptions to oil production in West Asia continued to keep oil markets on edge. Brent crude prices shot up to as high as $126 per barrel during the peak of the Iran war from around $70 per barrel before the start. As of Monday, 15 June, 2026, it had stood at $83 per barrel, still nearly 16% higher than pre-war level. India’s 14.2 kg lpg cylinder prices up ₹89 The price of India’s 14.2 kg LPG cylinder saw a notable increase. This was primarily due to the rise in global crude oil prices, which directly impacts the cost of LPG production. The Centre had hiked domestic cooking gas cylinder prices by ₹89 during the war. Eg. in Delhi, 14.2 kg cylinder prices were increased to ₹942 from ₹853. Rates of domestic cylinders were up 9.4% during the Iran war. Petrol, diesel and CNG also become costlier Prices of petrol, diesel and CNG had also gone up. Petrol and diesel prices were risen by a combined ₹7.50 per litre since May, while CNG became about ₹6 per kg costlier.