Noida, Sep 18 (APAC Media): Moody’s Ratings has raised its forecast for India’s real GDP growth in fiscal 2026-27 to 7 per cent from 6 per cent, citing stronger-than-expected economic momentum and the country’s resilience to external shocks, including disruptions linked to the Middle East conflict.
The ratings agency said India’s economy has maintained strong momentum, with real GDP growth accelerating to 8.2 per cent year-on-year in the first half of calendar 2026, compared with 7.3 per cent in 2025.
“Although we continue to expect India to grow faster than all other G20 economies, risks remain,” Moody’s said.
The agency said robust private consumption, capital formation and continued strength in the services sector have supported growth. Public infrastructure spending has also remained an important driver of investment, while there are signs of a possible recovery in private-sector investment.
Moody’s, however, flagged higher energy prices as a key risk to its outlook.
The ongoing conflict in the Middle East could push global energy prices higher, putting pressure on India’s inflation and external balances. Moody’s currently expects inflation to average 4.8 per cent in FY27, up from 2.4 per cent in FY26.
Higher crude oil and fertiliser import costs could widen India’s current account deficit, while weaker global demand and lower remittance inflows from the Middle East could add to external pressures, the agency said.
At the same time, Moody’s noted that India’s diversified sources of crude oil imports, sizeable foreign exchange reserves and strong domestic demand provide some cushion against external shocks.
The ratings agency expects the government to continue with fiscal consolidation, with the fiscal deficit target for FY27 set at 4.3 per cent of GDP, compared with 4.4 per cent in the previous fiscal year.
However, higher spending on energy subsidies, defence and infrastructure could make the pace of fiscal consolidation more challenging, it said.
Moody’s has retained India’s sovereign credit rating at Baa3 with a stable outlook. It said improvements in debt affordability, stronger revenue mobilisation and structural reforms that encourage private investment and raise per-capita incomes could strengthen the country’s credit profile over time.
The upgraded growth forecast places Moody’s projection above those of several other major institutions. The International Monetary Fund has projected 6.4 per cent growth for FY27, while S&P Global and the Reserve Bank of India have forecast growth of 6.6 per cent.
The latest assessment underscores the strength of domestic demand while highlighting energy prices, inflation and fiscal pressures as key factors that could affect India’s growth outlook in the coming year.
–ENDS–
Disclaimer: This article is for informational purposes only and is based on publicly available information. APAC Media is not responsible for investment decisions or losses. Please conduct your own research or consult a financial adviser before investing.
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