Moody’s Raises India Growth Forecast

Moody’s Ratings has raised its forecast for India’s real GDP growth in FY27 to 7% from 6%, citing stronger-than-expected economic activity and the economy’s resilience amid the ongoing conflict in the Middle East.

The ratings agency said India’s economy has demonstrated resilience to the global shock caused by the conflict. Moody’s continues to expect India to record faster growth than other G20 economies and similarly rated emerging-market sovereigns.

India’s economy grew 7.8% year-on-year in the April-June quarter, according to government data. The growth was supported by stronger investment and manufacturing activity, which offset weakness in mining and consumer-facing services.

Moody’s also highlighted risks to the outlook. Elevated energy prices and potential El Niño-related food price pressures could affect inflation, private consumption and overall economic growth.

The agency said higher global energy prices could increase government subsidy spending and create pressure for additional fiscal support. Rising defence and infrastructure expenditure could also constrain the pace of fiscal consolidation.

India has some buffers against external shocks, including diversified crude oil suppliers, sizeable foreign-exchange reserves and strong domestic demand. However, higher energy and fertiliser import costs, weaker external demand and lower remittance inflows from the Middle East remain potential risks to growth.