New Delhi, May 2 (IANS) India’s economy is likely to sustain growth above seven per cent in the near term even as geopolitical tensions in West Asia pose risks to the macroeconomic outlook, Chief Economic Adviser (CEA) V. Anantha Nageswaran said on Saturday.

He noted that the timing of the conflict coincides with expectations of another year of strong growth, adding that the Union government is closely monitoring and managing crude oil supply dynamics.

CEA Nageswaran said India’s reliance on imported crude should not be viewed as a vulnerability in isolation, as alternative energy options also come with cost-related challenges.

However, he flagged potential pressures on the external sector, cautioning that elevated import costs and moderation in remittance inflows could push the current account deficit (CAD) higher.

He indicated that the CAD could widen to around two per cent of GDP in FY27 from below one per cent in FY26.

On capital flows, CEA Nageswaran said India continues to remain an attractive destination for investors despite global uncertainties.

“Gross foreign direct investment (FDI) inflows are expected to be in the range of $90-95 billion in FY26, with momentum likely to hold in the following year as the country strengthens its manufacturing base.”

Addressing inflation, the CEA pointed to a gradual decline in the share of food in the consumer price index basket, even as short-term risks from weather conditions and input cost pass-through remain.

Nageswaran also highlighted progress in easing regulatory frameworks, noting that states have made substantial headway in deregulation efforts across key sectors.

At the same time, he said that while corporate profitability has improved significantly in recent years, private investment has not kept pace, signalling a divergence between earnings growth and capital formation.

Highlighting progress on regulatory reforms, Nageswaran said states are actively pushing deregulation across sectors.

According to the CEA, nearly 86 per cent of the identified deregulation targets across 23 areas have already been achieved.

–IANS

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