Moody's Raises India's FY27 GDP Growth Forecast to 7%

Moody's Ratings on Friday sharply raised India's GDP growth forecast for the current fiscal year to 7 percent, up from an earlier projection of 6 percent, citing the economy's resilience amid the ongoing Middle East conflict. The credit rating agency maintained India's Baa3 sovereign rating with a stable outlook, noting that high government debt and weak affordability continue to weigh on the country's credit profile. The revision comes after India's economy grew 7.8 percent year-on-year in the April-June quarter of fiscal year 2026-27, beating market expectations. Moody's said the strong performance was supported by increased private consumption, robust gross fixed capital formation reflecting public infrastructure spending, a likely revival in private investment, and sustained strength in the services sector. Moody's expects India to grow faster than all other G20 economies and similarly rated emerging market sovereigns. However, the agency flagged several risks to the outlook. Elevated energy prices, if the Middle East conflict persists, could push annual average inflation beyond the projected 4.8 percent for fiscal 2026-27, which is already significantly higher than the 2.