Commending India’s economic resilience amid global headwinds, Moody’s Ratings on Wednesday said the country’s economy is expected to grow at 7 per cent, up from an earlier 6.5 per cent estimate for the current fiscal year, aided by robust consumption, improving investment dynamics and strong macroeconomic fundamentals.
In its Global Macro Outlook 2027-28, Moody’s, however, said that near-term risks to growth persist as household consumption remains vulnerable to “intensifying and broadening price pressures”, with headline inflation close to the upper end of the RBI’s inflation target range, while a deficient monsoon and El Niño conditions weigh on agricultural output and rural demand. Retail inflation rose to 5.54 per cent in September 2026.
“India’s broad-based economic momentum and demonstrated resilience to the energy supply shock warrant upward revisions to our 2026-27 growth forecasts to 7 per cent from 6.5 per cent,” it said.
RBI estimates GDP growth of 7.1 per cent in the current fiscal year, in line with OECD projections. The International Monetary Fund (IMF), ADB and S&P Global Ratings have projected a 7 per cent growth, while Fitch Ratings expects India’s GDP to grow 6.9 per cent.
Moody’s said robust consumption, improving investment dynamics, and strong macroeconomic fundamentals suggest the economy is well positioned to sustain growth near 7 per cent over the medium term.
A sustained private investment boom that materially boosts manufacturing, employment and productivity could lift growth rates above Moody’s baseline projections.
India has adjusted to the energy price shock well than previously assumed, helped by its ability to diversify crude and gas supplies and buffer consumers from the immediate price impact through state-backed oil marketing companies and tax cuts.
India is also home to the world’s largest single-site refining complex, and its large and sophisticated refining capacity has helped limit fuel supply disruptions while supporting its role as a major exporter of refined petroleum products, Moody’s added.
“High frequency indicators, including robust capital goods production and imports, accelerating industrial credit growth and rising capacity utilisation, suggest that India may be at the cusp of a new private capex cycle after several years of corporate and banking- sector balance sheet repair,” the US-based agency said.
Broader economic activity also remains solid amid expanding manufacturing and services purchasing manager indexes and double-digit year-on-year growth in goods and services tax revenue, vehicle sales and merchandise exports, it added.
However, Moody’s said that with the RBI on track to raise rates further, tighter monetary policy could delay the recovery in private investment.
Moody’s said emerging markets face a more challenging external environment heading into 2027, with higher energy prices, elevated global interest rates and persistent trade and geopolitical uncertainty adding to inflation and financing pressures. At the same time, concerns over the returns on AI investment have emerged as an additional source of volatility.
Quoting Institute of International Finance data, Moody’s said non-resident portfolio flows to emerging markets recorded USD 33.8 billion in outflows in October, following USD 19.3 billion in September, with the pullback concentrated in equities, particularly in Asia.
“As investors become more selective, economies with strong domestic growth drivers, credible policy frameworks and solid buffers should remain relatively resilient,” Moody’s added.