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Moodys Ratings has raised its forecast for Indias real GDP growth in fiscal 2026-27 to 7 per cent from 6 per cent, citing the economys resilience to the global shock from the Middle East conflict, while cautioning that higher energy prices and fiscal pressures could pose risks to the outlook.
The rating agency made the upward revision as part of its periodic review of Indias sovereign ratings. Moodys said Indias real GDP growth accelerated to 8.2 per cent year-on-year in the first six months of calendar 2026, from 7.3 per cent in 2025, supported by stronger private consumption, robust fixed investment, continued public infrastructure spending, a likely revival in private investment and sustained services-sector strength. The economy's demonstrated resilience to the global shock wrought by the conflict in the Middle East has driven an upward revision to our forecast for real GDP growth in fiscal 2026-27 (year ending March 2027) to 7.0% from 6.0% previously. Moodys said. The agency said it continues to expect India to grow faster than all other G20 economies and similarly rated emerging-market sovereigns. However, it warned that an unresolved Middle East conflict and elevated energy prices could push annual average inflation above its 4.8 per cent FY27 projection, compared with 2.4 per cent in FY26. El Nino-related disruptions could add to food price pressures and weigh on private consumption and economic activity, while higher energy and fertiliser import costs, weaker external demand and lower remittances from the Middle East could widen the current account deficit and slow growth momentum. On fiscal policy, Moodys said the governments response to the Middle East shock has been muted, reflecting its commitment to reducing the central government deficit to 4.3 per cent of GDP in FY27 from 4.4 per cent a year earlier. However, higher global energy prices could increase subsidy spending and create pressure for additional support measures. Rising defence expenditure and continued infrastructure investment could also slow fiscal consolidation, it said. Moodys expects Indias fiscal metrics to improve gradually, supported by strong nominal GDP growth and efforts to strengthen tax administration and revenue collection. It said a more significant improvement in debt affordability would require durable revenue gains, a narrower fiscal deficit and a marked decline in government debt. (ANI)
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