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Moody’s slashes India’s GDP growth forecast to 6% for FY27 owing to West Asia conflict

06 Apr 2026 Evaluate

Moody's Ratings in its credit opinion report on India has cut India's economic growth estimates for the current fiscal (FY27) to 6% from an earlier 6.8%, noting that ongoing conflict in West Asia will moderate growth momentum and raise inflation risks. It said that extended disruptions particularly LPG shipments on account of the conflict would lead to near-term household shortages, increase fuel and transportation costs, and spillovers to food inflation through India’s reliance on imported fertilisers. 

The region accounts for around 55% of crude oil imports and over 90% of liquified petroleum gas (LPG) supplies to India. While inflation remains contained for now, Moody’s stated that geopolitical tensions have shifted the outlook upward, forecasting an average inflation rate of 4.8% in FY27, up from 2.4% in FY26.

With inflation risks re-emerging and growth remaining robust, Moody’s said that policy rates are likely to stay steady or to increase gradually in fiscal 2026-27, depending on the duration of geopolitical tensions and their pass-through to food and fuel prices.


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