Moody’s Raises India’s FY27 Growth Forecast to 7%
Moody’s Ratings raised its forecast for India’s economic growth in fiscal 2026-27 to 7% from 6.5%, citing broad-based momentum and resilience to energy supply shocks. The agency also warned that inflation, weather risks and tighter monetary policy could weigh on consumption and investment.
Moody’s Ratings raised its forecast for India’s economic growth in fiscal 2026-27 to 7% from 6.5% on Wednesday, citing broad-based momentum and resilience to energy supply shocks.
The agency said robust consumption, improving investment and strong economic fundamentals could support growth of around 7% over the medium term. It made the revision in its Global Macro Outlook 2027-28.
“India's broad-based economic momentum and demonstrated resilience to the energy supply shock warrant upward revisions to our 2026-27 growth forecasts to 7% from 6.5%,” Moody’s said.
Inflation and weather risks
Moody’s warned that household spending remains vulnerable as price pressures intensify and spread. Headline inflation is close to the upper end of the Reserve Bank of India’s 2-6% target range.
A deficient southwest monsoon and strengthening El Niño conditions could also weaken agricultural output and rural demand, the agency said.
Investment indicators are improving. Moody’s cited robust capital goods production and imports, faster industrial credit growth and rising capacity utilization.
“India may be at the cusp of a new private capex cycle after several years of corporate and banking-sector balance sheet repair,” the agency said. Capital expenditure, or capex, is money businesses invest in long-term assets such as equipment and facilities.
A sustained private investment boom focused on manufacturing could lift growth above Moody’s baseline projections by supporting employment and productivity. But the agency said tighter monetary policy could delay the recovery.
“With the RBI on track to raise rates further, tighter monetary policy could delay the recovery in private investment,” Moody’s said.
Energy resilience supports forecast
India has handled the energy price shock better than Moody’s had previously expected, the agency said. It pointed to the country’s ability to diversify crude oil and gas supplies and limit the immediate impact of higher prices on consumers.
State-backed oil marketing companies and tax cuts helped shield consumers, while India’s large refining capacity limited fuel supply disruptions. The country also strengthened its position as a major exporter of refined petroleum products.
Moody’s also cited expanding manufacturing and services purchasing managers’ indexes, along with double-digit year-on-year growth in goods and services tax collections, vehicle sales and merchandise exports.
The agency said inflation, weather conditions and tighter monetary policy remain near-term risks to India’s growth.
