Moody’s Raises India’s Growth Forecast to 7% for 2026-27

Moody's Ratings has raised its growth forecast for India's economy for the fiscal years 2026 and 2027 to 7%, up from 6.5%. The agency cited strong economic momentum and India's ability to handle energy supply shocks as key reasons for this change. The updated forecast was released in Moody's Global Macro Outlook 2027-28 on November 11, 2026.

Key Details

The ratings agency noted that strong consumer spending and improving investment trends would support this growth. It pointed out that India has managed the recent energy price shock better than expected. This success is due to its ability to diversify crude oil and gas supplies. Tax cuts and support from state-backed oil marketing companies have helped protect consumers from rising energy costs. Additionally, India's large refining capacity has kept it as a major exporter of refined petroleum products.

However, Moody's warned of possible risks to the near-term outlook. It mentioned that rising price pressures could affect household spending, with retail inflation near the upper end of the Reserve Bank of India's (RBI) target range of 2-6%. The agency also raised concerns about a weak southwest monsoon and strengthening El Niño conditions, which could hurt agricultural output and rural demand. Furthermore, it cautioned that more rate hikes by the RBI could slow a recovery in private capital spending.

Background

Moody's stated, "A sustained revival in private investment could push economic growth above our baseline projections," showing optimism about a potential new investment cycle in India.

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Based on reporting by: moneycontrol.com, livemint.com