Moody's Raises India GDP Growth Forecast to 7 Percent

Moody's raised India's real GDP growth forecast for fiscal year 2026-27 to 7.0 percent from a previous projection of 6.0 percent. The upgrade follows a periodic review and is driven by India's resilience to global shocks from the Middle East conflict, strong private consumption, robust gross fixed capital formation, and continued public infrastructure spending.

This projection is more optimistic than those from other major institutions. The International Monetary Fund projected growth at 6.4 percent, while S&P Global Ratings and the Reserve Bank of India both projected 6.6 percent. The Reserve Bank of India's figure represents a decrease from its previous forecast of 6.9 percent.

While the agency retained India's Baa3 long-term issuer rating with a stable outlook, it warned that unresolved conflict in the Middle East could keep energy prices elevated and push inflation above its 4.8 percent projection. Additionally, El Niño-related disruptions may pressure food prices. Moody's also noted that high general government debt and rising defense and infrastructure spending may limit the pace of fiscal debt reduction.