S&P Global Ratings, in its Asia-Pacific Economic Outlook, has raised its forecast for India’s gross domestic product (GDP) growth for the current fiscal year ending March 31, 2027 (FY27), to 7.0%, from 6.6% previously. It said several factors drove growth above its expectations in the June quarter, including robust industrial activity, healthy consumption, strong goods exports, and an acceleration in government investment.
The ratings agency expects growth to moderate in the second half of the fiscal year as the tailwinds from Goods and Services Tax (GST) rationalisation and income-tax cuts fade. It said weather-related risks also warrant close monitoring. Cumulative rainfall was 15% below normal as of September 9, 2026, during the current monsoon season. Therefore, it said agricultural output and food inflation remain key variables to watch.
On inflation, the ratings agency expects consumer inflation to average 5.1% during the fiscal year and the Reserve Bank of India (RBI) to raise its policy rate by 25 basis points (bps). It expects the balance of considerations to shift towards higher interest rates, citing solid economic growth, persistent inflationary pressures, the unresolved conflict in West Asia, and weather-related risks as factors supporting such a shift.
