Moody’s Ratings has raised its forecast for India’s economic growth in the current financial year to 7 per cent, up from 6.5 per cent. The revision came in the agency’s Global Macro Outlook 2027-28, published on Wednesday, 11 November. Moody’s growth forecast now sits above its earlier estimate because the economy has held up better than the agency expected against the energy price shock.
The agency said India’s broad-based economic momentum and demonstrated resilience to the energy supply shock warranted the upward revision. It added that strong consumption, improving investment and firm macroeconomic fundamentals leave the economy well placed to sustain growth close to 7 per cent over the medium term. Moody’s growth forecast for the year is now only a little below the Reserve Bank of India’s 7.1 per cent projection. The forecast covers real gross domestic product growth in 2026-27, the financial year ending in March 2027.
Why Moody’s growth forecast moved up
The data behind the change is the April to June quarter, when real GDP grew 7.8 per cent year on year and nominal GDP rose 10.3 per cent. That reading beat the Reserve Bank of India’s projection and came in above the median estimate in a Reuters poll. Moody’s growth forecast reflects the view that domestic demand has carried the economy through a period of high oil prices and war in West Asia.
India has coped with the energy shock better than the agency had assumed. The country has spread its crude oil and gas purchases across more suppliers, and state-backed oil marketing companies and tax cuts have shielded consumers from the full rise in fuel prices. India also has the world’s largest single-site refining complex, and its large refining capacity has limited fuel supply disruption while supporting exports of refined petroleum products.
High-frequency indicators support Moody’s growth forecast. Moody’s cited strong capital goods production and imports, faster industrial credit growth and rising capacity use, and said India may be at the start of a new private investment cycle after several years of repair to company and bank balance sheets. Manufacturing and services purchasing manager indexes are expanding, and goods and services tax revenue, vehicle sales and merchandise exports have grown at double-digit rates from a year earlier.
What supports Moody’s growth forecast
Consumption is the main support. Household spending has stayed firm even as energy prices rose, and investment has begun to pick up after a long pause. A sustained rise in private investment that lifts manufacturing, jobs and productivity could push growth above the agency’s baseline projections, Moody’s said. The agency’s view is that the economy has room to grow faster if companies spend more on new capacity. Moody’s growth forecast rests on that mix of firm consumption and rising investment.
Other forecasters have moved in the same direction. The Reserve Bank of India raised its real GDP growth forecast for 2026-27 by 40 basis points to 7.1 per cent, from 6.7 per cent. The Organisation for Economic Co-operation and Development raised its forecast by 80 basis points to 7.1 per cent. Both now sit slightly above the new Moody’s growth forecast.
Risks Moody’s still sees
The upgrade comes with warnings. Moody’s said near-term risks remain because household consumption is exposed to rising and spreading price pressures, with headline inflation close to the top of the Reserve Bank’s 2 to 6 per cent target range. A weak South-West monsoon and strengthening El Nino conditions will weigh on farm output and rural demand, the agency said. Those risks explain why Moody’s growth forecast stops at 7 per cent rather than going higher.
Interest rates are the other risk. Moody’s said the Reserve Bank is on track to raise rates further, and tighter policy could delay the recovery in private investment. Higher rates make borrowing dearer for companies, which can lead them to put expansion plans on hold. The agency’s sovereign rating on India stays at Baa3 with a stable outlook, a separate judgement from its growth forecast.
Moody’s growth forecast will face its next test when the July to September GDP data is released by the National Statistical Office on 30 November. The figures will show whether the momentum of the first quarter carried into the second, and whether farm output and food prices stayed on the course the agency expects.