Moody's Cuts India Growth Forecast to 6% on West Asia Conflict

Global rating agency Moody's has lowered its forecast for India's economic growth in the fiscal year 2026-27 to 6 percent from a previous estimate of 6.8 percent, attributing the revision to the ongoing military conflict in West Asia that began in late February 2025. The downgrade, detailed in a credit opinion report released on March 31, highlights how the disruptions are expected to curb growth momentum while elevating inflation risks across the South Asian economy.

The conflict, which escalated after military strikes by the United States and Israel against Iran on February 28 prompted retaliation and the blocking of the Strait of Hormuz, has severely affected global energy supplies. India relies on West Asia for approximately 55 percent of its crude oil imports and more than 90 percent of its liquefied petroleum gas supplies, with much of the LPG transiting through the strait. Moody's analysts noted that prolonged interruptions, particularly in LPG shipments, could result in near-term household shortages of cooking gas, alongside rising fuel and transportation costs. These pressures are likely to spill over into food inflation, given India's dependence on imported...