Moody’s Ratings on Wednesday retained its growth forecast for the Indian economy at 7 per cent for the financial year 2026-27, citing its resilience to the energy supply shock, robust consumption and signs of a revival in private investment, even as it flagged inflationary pressures and monsoon-related risks to the outlook.
In September, it had revised its growth forecast for India to 7 per cent from 6 per cent.
In its latest Global Macro Outlook 2027-28, the rating agency said India’s broad-based economic momentum and strong macroeconomic fundamentals put it in a position to sustain growth near 7 per cent over the medium term.
“Robust consumption, improving investment dynamics and strong macroeconomic fundamentals imply that the economy appears 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 our baseline,” it said.
The agency’s calendar-year projections also showed the economy growing at 7 per cent in 2026, 2027 and 2028, following an estimated 7.3 per cent expansion in 2025.
Moody’s attributed India’s stronger outlook partly to its ability to adjust to the energy price shock caused by the West Asia conflict. “India has adjusted to the energy price shock better 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,” the agency said.
India’s extensive refining capacity, including the world’s largest single-site refinery complex, has helped minimise fuel supply disruptions and enabled the country to remain a major exporter of refined petroleum products, Moody’s added.
The agency also flagged signs that India could be on the cusp of a new private capital expenditure cycle after several years of corporate and banking-sector balance-sheet repair. It said robust capital goods production and imports, accelerating industrial credit growth, and rising capacity utilisation pointed to improving investment momentum.
“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,” the agency noted.
However, the agency flagged near-term risks from rising prices and weakening rural demand. Household consumption remained vulnerable to intensifying and broadening price pressures, with headline inflation close to the upper end of the Reserve Bank of India’s (RBI’s) 2-6 per cent target range, it said.
A deficient southwest monsoon and strengthening El Niño conditions were also likely to weigh on agricultural output and rural demand, the agency noted.
“With the RBI on track to raise rates further, tighter monetary policy could delay the recovery in private investment,” Moody’s added.
Its projections showed India’s annual average inflation easing from 4.5 per cent in 2026 to 4.3 per cent in 2027 and 4 per cent in 2028.
India’s GDP grew 7.8 per cent in the April-June quarter of FY27, according to data released by the Ministry of Statistics and Programme Implementation (MoSPI) in August. The Finance Ministry, in its October 2026 Monthly Economic Review, raised its FY27 real GDP growth estimate to 7.3 per cent from the 6.8-7.2 per cent range projected in the Economic Survey, citing robust domestic demand and sustained investment activity, while flagging risks from elevated crude oil prices, rising food inflation and uncertainty over the kharif crop.
Across G20 economies, Moody’s expected growth to slow to 2.6 per cent in 2026 from 2.8 per cent in 2025 and remain at 2.6 per cent in 2027 and 2028. Advanced economies were projected to grow by about 1.7 per cent in 2027 and 2028, while growth in emerging market economies was expected to ease from 4.5 per cent in 2025 to 3.8 per cent in 2026, before recovering to 4 per cent in 2027 and 2028.
The agency said investment would remain a key source of global demand, led by spending on artificial intelligence (AI), digital infrastructure, defence and energy security. However, higher financing costs and weaker household purchasing power would offset some of the impetus.
Moody’s also warned that a prolonged energy shock, renewed trade and geopolitical tensions, rising bond yields and disappointing returns from AI investments could weigh on global growth. It expected Brent crude prices to average $90 per barrel in 2027 and $80 in 2028, compared with an estimated $93 in 2026.
