Resilient Growth Supports 7% Projection
Key Highlights
- Moody’s Ratings raised its India GDP growth forecast for FY2026-27 to 7%, from 6% earlier.
- The agency cited India’s resilience to global shocks as a key factor behind the revision.
- India’s real GDP growth accelerated to 8.2% year-on-year in the first six months of calendar 2026.
- Strong private consumption, infrastructure investment and services activity supported growth.
- Moody’s flagged elevated oil prices and possible El Niño-related disruptions as risks to inflation.
- India is expected to grow faster than other G20 economies, according to Moody’s forecast.
- Moody’s expects India’s debt reduction to remain gradual because of its high debt burden and interest costs.
Moody’s Ratings has sharply raised its forecast for India’s real GDP growth in fiscal 2026-27 to 7%, from its earlier projection of 6%, citing the economy’s resilience to global shocks.
The rating agency said India’s economy has demonstrated strength despite uncertainties arising from the conflict in the Middle East. Strong domestic demand, rising private consumption and continued investment in infrastructure have supported economic activity.
India’s real GDP growth accelerated to 8.2% year-on-year during the first six months of calendar 2026, compared with full-year growth of 7.3% in calendar 2025. Moody’s attributed the stronger performance to private consumption, robust gross fixed capital formation and sustained strength in the services sector.
The agency said India is expected to grow faster than all other G20 economies as well as similarly rated emerging-market sovereigns under its current forecast.
However, Moody’s also highlighted several risks to the outlook. Continued conflict in the Middle East could keep energy prices elevated and push inflation above its projection of 4.8% for FY2026-27. The agency also warned that El Niño-related disruptions could increase food-price pressures and affect consumption and economic activity.
Higher energy and fertiliser import costs could add pressure to India’s external position. Moody’s also pointed to softer external demand and potentially weaker remittance inflows from the Middle East as factors that could affect growth momentum.
On public finances, Moody’s expects debt reduction to remain gradual and debt affordability to remain relatively weak, reflecting India’s high debt burden and elevated interest-cost structure.
The agency maintained a stable outlook on India’s sovereign rating, citing gradually improving fiscal metrics and resilient growth prospects compared with peers.
The latest forecast follows India’s 7.8% GDP growth in the June quarter of FY27, which was above the 7% growth estimate cited by the RBI.
