S&P Global Ratings has raised its forecast for India's economic growth in the fiscal year ending March 31, 2027, to 7% from 6.6%, citing stronger-than-expected activity — while warning that the Reserve Bank of India is likely to respond to rising inflation with a 25-basis-point interest rate hike.
In its report, "Economic Outlook Asia-Pacific Q4 2026: Exports, Domestic Demand Will Shore Up Growth," S&P said India's economy outperformed its expectations in the June quarter, growing 7.8%. It credited robust industrial activity, healthy consumption, strong goods exports and accelerating government investment. "We have consequently upgraded our GDP growth forecast for the current fiscal year, ending March 31, 2027, to 7 per cent, from 6.6 per cent previously," the agency said.
Growth to cool in the second half
S&P expects momentum to ease in the second half of the fiscal year as the boost from General Sales Tax rationalisation and income tax cuts fades. It also flagged weather-related risks: cumulative monsoon rainfall was 15% below normal through September 9, making agricultural output and food inflation key variables to watch.
On inflation, S&P expects consumer prices to average 5.1% in FY27, and sees the RBI raising its policy rate by 25 basis points in the current fiscal year, citing solid growth, persistent inflationary pressures, the unresolved West Asia conflict and weather risks.
A chorus of upgrades
S&P is not alone. Moody's raised its India growth forecast to 7% from 6% last week, calling India the fastest-growing economy among all G20 nations. Fitch Ratings also lifted its projection to 6.9% from 6.4%, and said it expects the RBI to raise rates by 25 basis points in its October meeting to 5.5%. The RBI itself has projected FY27 growth of 6.7%.
Sources:
S&P Global raises India's GDP forecast to 7% (The Hindu BusinessLine/PTI)
Fitch raises India's FY27 GDP growth projections to 6.9% (The Hindu BusinessLine/PTI)
S&P Raises India's FY27 GDP Growth Forecast To 7%, Sees 25 Bps RBI Rate Hike (Outlook Business)
In its report, "Economic Outlook Asia-Pacific Q4 2026: Exports, Domestic Demand Will Shore Up Growth," S&P said India's economy outperformed its expectations in the June quarter, growing 7.8%. It credited robust industrial activity, healthy consumption, strong goods exports and accelerating government investment. "We have consequently upgraded our GDP growth forecast for the current fiscal year, ending March 31, 2027, to 7 per cent, from 6.6 per cent previously," the agency said.
Growth to cool in the second half
S&P expects momentum to ease in the second half of the fiscal year as the boost from General Sales Tax rationalisation and income tax cuts fades. It also flagged weather-related risks: cumulative monsoon rainfall was 15% below normal through September 9, making agricultural output and food inflation key variables to watch.
On inflation, S&P expects consumer prices to average 5.1% in FY27, and sees the RBI raising its policy rate by 25 basis points in the current fiscal year, citing solid growth, persistent inflationary pressures, the unresolved West Asia conflict and weather risks.
A chorus of upgrades
S&P is not alone. Moody's raised its India growth forecast to 7% from 6% last week, calling India the fastest-growing economy among all G20 nations. Fitch Ratings also lifted its projection to 6.9% from 6.4%, and said it expects the RBI to raise rates by 25 basis points in its October meeting to 5.5%. The RBI itself has projected FY27 growth of 6.7%.
Sources:
S&P Global raises India's GDP forecast to 7% (The Hindu BusinessLine/PTI)
Fitch raises India's FY27 GDP growth projections to 6.9% (The Hindu BusinessLine/PTI)
S&P Raises India's FY27 GDP Growth Forecast To 7%, Sees 25 Bps RBI Rate Hike (Outlook Business)