S&P Global Ratings Lowers India's FY27 GDP Growth Forecast

S&P Global Ratings projected India's real GDP growth will slow to 6.6% in the fiscal year ending March 2027, down from 7.7% in fiscal 2026. This forecast aligns with estimates from the Reserve Bank of India and is driven by slowing global growth, energy market stress tied to the West Asia conflict, and a sub-par monsoon influenced by El Nino.

The agency expects consumer inflation to reach 5.1% this fiscal year as manufacturers pass higher energy costs to consumers and prices for diesel, petrol, and cooking gas rise. Rising fertilizer costs are also expected to weigh on food production. These inflationary pressures and a weakening rupee may prompt the Reserve Bank of India to implement a policy rate hike in the second half of the fiscal year.

To counter these economic challenges, the Government of India has implemented state-wise contingency plans for alternative crops to mitigate a 43% rainfall deficit. Additionally, Indian authorities have introduced measures to encourage foreign capital inflows to address a rising current account deficit and stabilize the currency.