Moody’s Raises India GDP Growth Forecast To 7% For FY27 On Strong Domestic Demand

India’s economy has shown greater resilience to global disruptions than previously anticipated, prompting Moody’s Ratings to increase its real GDP growth forecast for 2026-27 to 7% from its earlier estimate of 6%.

The ratings agency said the upward revision reflects stronger domestic consumption, steady infrastructure investment, healthy capital formation, early signs of recovery in private investment and continued momentum in the services sector.

Domestic demand supports growth outlook

India’s real GDP growth reached 8.2% year-on-year during the first six months of calendar 2026, compared with 7.3% growth recorded for the full year in 2025, Moody’s said.

“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 7.0% from 6.0% previously,” Moody’s said.

The revised projection is higher than estimates from several other major institutions. The International Monetary Fund had forecast 6.4% growth for FY27, while S&P Global Ratings had projected 6.6%. The Reserve Bank of India had earlier reduced its growth forecast to 6.6%.

Moody’s said domestic demand remains a key driver of India’s economic performance. Private consumption has improved, while public infrastructure expenditure continues to support investment activity. The agency also expects private-sector investment to gain momentum.

Moody’s maintains stable rating outlook

The ratings agency said strong services activity has helped India manage challenges arising from the Middle East conflict, including concerns over energy prices and external trade pressures.

Moody’s retained India’s Baa3 long-term issuer rating and stable outlook. It said the rating reflects India’s “large and diversified economy with high growth potential, a sound external position, and the government's stable domestic financing base”.

However, the agency also highlighted challenges, including high government debt levels, weak debt affordability and low per capita income.