Noida, Sep 23 (APAC Media): S&P Global Ratings has raised its forecast for India’s economic growth in the financial year 2026-27 to 7 per cent from 6.6 per cent earlier, citing stronger-than-expected economic activity in the June quarter.
The ratings agency said robust industrial activity, resilient consumption, higher goods exports and increased government investment supported growth during the quarter.
India’s real GDP expanded by 7.8 per cent year-on-year in the June quarter, although the pace moderated from 8.6 per cent in the previous quarter.
“Several factors drove growth to higher levels than we expected in the June quarter,” S&P Global Ratings said in its latest Asia-Pacific Economic Outlook.
The agency said consumption growth remained strong, while investment momentum continued to be among the strongest in the Asia-Pacific region.
S&P expects India’s growth to remain relatively firm over the next two financial years, forecasting GDP expansion of 7.2 per cent in FY28 and 7 per cent in FY29.
However, it expects economic growth to moderate in the second half of FY27 as some temporary factors supporting demand, including GST rationalisation and income-tax cuts, fade.
On monetary policy, S&P expects the Reserve Bank of India to raise its policy rate by 25 basis points during FY27.
The agency estimates consumer inflation to average 5.1 per cent in FY27 and expects the policy rate to rise to 5.5 per cent by the end of the fiscal year from 5.25 per cent in FY26.
The projected rate increase comes amid concerns over higher energy prices and inflationary pressures.
S&P also flagged geopolitical tensions and developments in West Asia as risks to inflation and the Indian rupee. Higher crude oil prices could further increase import costs and put pressure on the currency, it said.
Weather conditions are another risk to the outlook. The agency noted that cumulative rainfall was 15 per cent below normal through September 9, raising concerns about agricultural output and food prices.
A weaker agricultural performance could also affect rural demand, while higher food and energy prices could add to inflationary pressures.
Despite these risks, S&P said domestic demand remains an important support for the Indian economy.
The revised growth forecast follows a series of relatively positive assessments of India’s near-term economic prospects. Moody’s Ratings has also raised its FY27 growth forecast for India to 7 per cent from 6 per cent, citing stronger private consumption, investment and public infrastructure spending.
S&P’s latest projections point to continued strong growth but also highlight the challenges facing policymakers as they balance economic expansion with inflation, currency and external risks.
The outlook will depend on the durability of domestic demand, government investment, global energy prices and the broader geopolitical environment in the months ahead.
–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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