Moody’s Raises India’s FY27 GDP Growth Forecast To 7%

Moody’s Ratings has raised its forecast for India’s real GDP growth in financial year 2026-27 to 7%, up from its earlier estimate of 6%.

The rating agency cited stronger-than-expected economic activity and India’s resilience to the global shock caused by the ongoing Middle East conflict.

Moody’s said India’s economy has performed better than expected despite global uncertainty.

Strong domestic demand, higher private consumption, robust investment and continued public infrastructure spending have supported growth.

Sustained activity in the services sector and signs of a revival in private investment have also strengthened the outlook.

India’s real GDP growth accelerated to 8.2% year-on-year in the first six months of calendar 2026, compared with 7.3% for the full year in 2025, according to Moody’s.

The agency said stronger consumption and investment have helped the economy absorb external shocks.

The rating agency also highlighted continued government spending on infrastructure as a key driver of gross fixed capital formation. It expects private-sector investment to gain further momentum, adding another source of economic growth.

However, Moody’s warned that risks remain. A prolonged Middle East conflict and elevated global energy prices could push inflation above its 4.8% forecast for FY27.

El Niño-related disruptions could also increase food prices and weaken private consumption.

Higher energy and fertiliser import costs, softer external demand and weaker remittance inflows from the Middle East could put additional pressure on growth.

Moody’s retained India’s Baa3 sovereign rating with a stable outlook.

The agency said India’s large and diversified economy, strong domestic demand and foreign exchange reserves provide buffers against external shocks, while high government debt and weaker debt affordability remain constraints.

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