Moody's Ratings on Wednesday raised India's economic growth forecast for the current financial year to 7 per cent from its earlier estimate of 6.5 per cent, citing robust domestic consumption, improving investment dynamics and strong macroeconomic fundamentals.
In its Global Macro Outlook 2027-28, the US-based ratings agency said India's broad-based economic momentum and resilience to global energy supply disruptions justified the upward revision.
"India's broad-based economic momentum and demonstrated resilience to the energy supply shock warrant upward revisions to our 2026-27 growth forecasts to 7 per cent from 6.5 per cent," Moody's said.
The agency noted that India's economic fundamentals remained supportive of sustained expansion, with consumption, industrial activity and investment indicators pointing towards continued growth.
However, it cautioned that inflationary pressures, adverse weather conditions and tighter monetary policy could pose risks to the outlook.
๐๐ฟ๐ผ๐๐๐ต ๐ผ๐๐๐น๐ผ๐ผ๐ธ ๐ฟ๐ฒ๐บ๐ฎ๐ถ๐ป๐ ๐๐๐ฟ๐ผ๐ป๐ด
Moody's said India's economy appeared well positioned to sustain growth close to 7 per cent over the medium term, supported by robust consumption and improving investment conditions.
It added that a sustained revival in private capital expenditure, particularly in manufacturing, could lift economic growth above its baseline projections by strengthening employment generation and productivity.
The revised forecast is broadly aligned with estimates from other major institutions.
The Reserve Bank of India has projected GDP growth of 7.1 per cent for 2026-27, matching the Organisation for Economic Co-operation and Development's estimate.
The International Monetary Fund, Asian Development Bank and S&P Global Ratings have projected growth of 7 per cent, while Fitch Ratings expects the Indian economy to expand by 6.9 per cent.
Moody's said India's ability to adjust to the global energy price shock had proved stronger than previously anticipated.
The country diversified its crude oil and natural gas supplies, while state-backed oil marketing companies and tax reductions helped cushion consumers from the immediate impact of higher energy prices.
The agency also highlighted India's extensive refining infrastructure, including the world's largest single-site refining complex, which helped minimise fuel supply disruptions and maintain the country's position as a major exporter of refined petroleum products.
๐ฃ๐ฟ๐ถ๐๐ฎ๐๐ฒ ๐ถ๐ป๐๐ฒ๐๐๐บ๐ฒ๐ป๐ ๐บ๐ฎ๐ ๐ด๐ฎ๐ถ๐ป ๐บ๐ผ๐บ๐ฒ๐ป๐๐๐บ
Moody's pointed to several high-frequency indicators suggesting that India could be approaching a fresh cycle of private investment.
"High frequency indicators, including robust capital goods production and imports, accelerating industrial credit growth and rising capacity utilisation, suggest that India may be at the cusp of a new private capex cycle after several years of corporate and banking-sector balance sheet repair," the agency said.
It noted that economic activity remained strong, supported by expanding manufacturing and services purchasing managers' indexes.
Double-digit year-on-year growth in goods and services tax collections, vehicle sales and merchandise exports also indicated continued economic momentum.
However, the agency cautioned that further interest rate increases by the RBI could delay the recovery in private investment by raising borrowing costs.
๐๐ป๐ณ๐น๐ฎ๐๐ถ๐ผ๐ป, ๐๐น ๐ก๐ถรฑ๐ผ ๐ฝ๐ผ๐๐ฒ ๐ฟ๐ถ๐๐ธ๐
Despite upgrading its growth forecast, Moody's warned that household consumption remained vulnerable to intensifying and broadening price pressures.
Retail inflation rose to 5.54 per cent in September 2026, bringing headline inflation closer to the upper end of the RBI's target range.
The agency said a deficient monsoon and El Niรฑo conditions could adversely affect agricultural production and rural demand, potentially weakening household spending.
Higher inflation and tighter monetary policy could also weigh on business confidence and investment decisions.
๐๐น๐ผ๐ฏ๐ฎ๐น ๐๐ป๐ฐ๐ฒ๐ฟ๐๐ฎ๐ถ๐ป๐๐ ๐ฎ๐ฑ๐ฑ๐ ๐ฝ๐ฟ๐ฒ๐๐๐๐ฟ๐ฒ
Moody's said emerging markets were entering 2027 amid a more challenging external environment characterised by elevated energy prices, higher global interest rates and persistent trade and geopolitical uncertainties.
Concerns about returns on artificial intelligence investments have emerged as an additional source of financial market volatility.
Citing data from the Institute of International Finance, the agency said non-resident portfolio investments in emerging markets recorded outflows of USD 33.8 billion in October, following outflows of USD 19.3 billion in September.
The withdrawals were concentrated in equities, particularly across Asian markets.
"As investors become more selective, economies with strong domestic growth drivers, credible policy frameworks and solid buffers should remain relatively resilient," Moody's said.
The agency indicated that India's domestic growth drivers and macroeconomic resilience could help it navigate these external pressures, although inflation and investment trends would remain important determinants of its economic performance.