India’s expected economic growth of 6.6% for fiscal 2027 could face significant ‌risks as the Iran war fans inflation worries, but ample foreign exchange buffers and a well-capitalised banking system could help mitigate some of it, the World Bank said.

Doubts lingered over a fragile two-week Middle East ceasefire, raising concerns that energy ​flows through the crucial Strait of Hormuz will remain restricted. India, which imports about 90% ​of its oil, is among economies most exposed to prolonged war-related energy supply ⁠disruptions.

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Retail inflation in the South Asian nation is projected at 4.9% for the current fiscal year, ​reflecting higher food and energy prices and exchange depreciation pressure, World Bank’s India Economist Aurelien Kruse said ​at a news conference in New Delhi on Thursday, after the release of its biannual report on the nation.

The vulnerability has already rattled investors. The rupee has slid to a record low as foreign funds pulled nearly $19 billion ​from markets between March and early April.

India’s central bank expects growth to fall to 6.9% in ​fiscal 2027 from an expected 7.6% in the fiscal year ended March 31, 2026. Average inflation for the year ‌is ⁠projected at 4.6%.