Ind-Ra projects GDP growth to slow to 6.7% in FY27

India Ratings & Research (Ind-Ra) on Tuesday projected India’s economic growth to decelerate to 6.7 per cent in the current fiscal year on slowdown in demand and supply and retail inflation is expected to stay within the RBI’s tolerance band at 4.4 per cent despite recent fuel price hikes.

Ind-Ra’s projection compares to 6.9 per cent GDP growth and 4.6 per cent inflation projection by the RBI.

The agency believes higher fuel and food prices due to the West Asia conflict’s uncertainty and the likely impact of evolving El Nino on agriculture from mid-2026 will pull down GDP growth in FY27 to 6.7 per cent.

Indian economy is estimated to have grown 7.6 per cent in FY26.

“Major headwinds include geopolitical developments, particularly the West Asia conflict, high headline inflation, a depreciated currency from weak capital inflows, weaker-than-expected capex especially by the Government to reduce fiscal risks, weak global trade growth, strong FY26 growth (base effect), low industrial production as measured by the Index of Industrial Production (IIP), and notably, the likely El Nino weather pattern from mid-2026,” India Ratings & Research Director — Economics Megha Arora said.

Ind-Ra has assumed average oil prices at $95/bbl in FY27 and expects the Government, oil marketing companies and consumers to share the burden of high global oil prices with consumers sharing the least burden. The agency estimates that a $10/bbl increase in crude oil prices could reduce GDP growth by 44 bps, while a 10 per cent reduction in capex could lower GDP growth to 6 per cent, Arora said.

Ind-Ra expects the government to announce easy access to credit and measures like credit guarantees as opposed to direct cash transfers to shield people and small industries from the impact of the West Asia crisis.

For the April-June quarter of the current fiscal year, Ind-Ra estimates GDP growth at 6.7 per cent and said the El Nino impact is likely to be felt more in the July-September quarter, as against the June quarter. Ind-Ra estimates the rupee-dollar exchange rate to average Rs 94.28, a depreciation of 6.7 per cent year-on-year in FY27. The Indian rupee touched a record low of 96.47 to a dollar on Tuesday.