Citing expectations of strong growth in the April-September period, domestic rating agency Crisil has raised its FY27 GDP growth estimate for India to 7 per cent from its earlier projection of 6.6 per cent. Crisil Chief Economist D K Joshi said the revision was driven by expectations of robust growth in the first half, with GDP growth in Q1 estimated at 7.8 per cent. He said “The economy is doing well. We expect the first half to witness strong growth, while growth will slow in the second half”.
Joshi said the agency has assumed crude oil prices to average between $87 and $93 per barrel in FY27, compared with $70 per barrel in FY26, while making its growth projections. The monsoon is another key factor, with rainfall currently 12 per cent below the long-period average and potentially affecting the winter crop. Reservoir levels and soil moisture will be crucial for the rabi crop and could, in turn, have an impact on economic growth. On the currency front, he said the rupee is undervalued and is likely to appreciate to 93.5 against the US dollar by March 2027. He noted that previous episodes of currency depreciation have also been followed by a strengthening of the rupee after an initial period of pressure.
Crisil expects the Reserve Bank of India (RBI) to raise the policy rate by 25 basis points each in October and December. However, Joshi said the rate hikes are unlikely to hurt private capital investment significantly, as corporates are sitting on large cash reserves and have deleveraged balance sheets. He added that the RBI is likely to continue using various tools to manage excess liquidity in the financial system. He also stressed the need to focus on skilling to make the growth process more broad-based and sustainable. While artificial intelligence could automate some existing jobs, he said it could also create new employment opportunities, as previous technological revolutions have done.
