India Ratings & Research on Tuesday projected India’s GDP growth to slow to 6.8 per cent in FY27, down from 7.6 per cent in the previous fiscal, citing risks from fuel and food inflation, the West Asia conflict, a weak rupee and the possible impact of El Niño on agriculture.
The forecast, however, is slightly higher than the 6.7 per cent growth estimate the agency had made in May 2026.
The Reserve Bank of India had earlier this month raised its FY27 growth forecast from 6.6 per cent to 6.7 per cent, citing resilience in the domestic economy.
West Asia conflict, El Nino pose risks
India Ratings said uncertainty surrounding the West Asia conflict could push up fuel and food inflation, while currency weakness and the potential impact of El Nino could weigh on economic activity.
The agency has lowered its average crude oil price assumption for FY27 to USD 85 per barrel, from USD 95 per barrel estimated in May.
Ind-Ra Chief Economist and Head - Public Finance Devendra Pant said the Indian basket crude price averaged USD 101.31 per barrel in the June quarter and USD 96.49 per barrel between April and July 2026.
"Our crude oil price assumption for FY27 is USD85/bbl. Lower oil prices positively impact the Indian economy by reducing the trade/current account deficit (CAD). However, higher inflation due to El Niño may limit growth upside from lower oil prices," Pant said.
Quarterly growth seen between 6.6% and 6.9%
Ind-Ra expects GDP growth at 6.9 per cent in April-June, 6.6 per cent in July-September, 6.7 per cent in October-December and 6.9 per cent in January-March.
The corresponding RBI projections stand at 7 per cent, 6.4 per cent, 6.5 per cent and 6.8 per cent.
The agency expects the rupee to average Rs 93.98 against the US dollar in FY27, representing a 6.4 per cent year-on-year depreciation.
It also estimates capital flows of USD 70 billion through FCNR-B deposits and external commercial borrowings.
Inflation and fiscal deficit remain concerns
Ind-Ra has projected average retail inflation at 4.9 per cent in FY27, compared with 2 per cent in FY26. The current account deficit is expected to rise to 1.5 per cent of GDP from 0.6 per cent.
The agency said the government’s FY27 fiscal deficit target of 4.3 per cent could prove challenging, particularly because of LPG and fertiliser subsidies. Direct tax collections and non-tax revenue could provide support, while indirect tax collections may remain a challenge.