Moody’s Ratings on Friday sharply raised India’s GDP growth forecast for current fiscal to 7 per cent, from 6 per cent earlier, saying the economy has shown resilience to global shocks amid the Middle East conflict but flagged risks to inflation from elevated oil prices and El Nino impact.
Moody’s said India’s real GDP growth accelerated to 8.2 per cent year on year in the first six months of calendar year (CY) 2026.
However, fiscal accommodation in the context of the uncertain global macroeconomic outlook, including revenue-eroding measures, could impede progress towards more material debt reduction and exacerbate already weak debt affordability, it added. Moody’s said India’s real GDP growth accelerated to 8.2 per cent year on year in the first six months of calendar year (CY) 2026, up from 7.3 per cent for the full year in CY 2025, supported by stronger private consumption, robust gross fixed capital formation that reflects continued public infrastructure spending and a likely revival of private sector investment, and sustained strength in the services sector.
“The economy’s demonstrated resilience to the global shock wrought by the conflict in the Middle East has driven an upward revision to our forecast for real GDP growth in fiscal 2026-27 (year ending March 2027) to 7 per cent from 6 per cent previously,” Moody’s said. India is expected to grow faster than all other G20 economies, as well as similarly rated emerging market sovereigns, Moody’s said, but warned of risks. “Looking ahead, in the absence of an enduring resolution to the conflict in the Middle East, elevated energy prices could push annual average inflation beyond our projection of 4.8 per cent for fiscal 2026-27, which is already significantly higher than the 2.4 per cent outturn in fiscal 2025-26, while El Nino-related disruptions could increase food price pressures, weighing on private consumption and economic activity,” it added. Moody’s further said that the ‘stable’ outlook on India’s rating incorporates India’s gradually improving fiscal metrics and resilient growth prospects compared with peers.
