Weather-related risks warrant close monitoring. Cumulative rainfall was 15 per cent below normal till September 9, 2026, in the current monsoon season. Agricultural output and food inflation therefore remain key variables to watch,S&P Global Ratings said.
New Delhi: S&P Global Ratings on Wednesday raised India’s GDP growth projections for the current fiscal to 7 per cent, citing robust economic activity and forecasting that the RBI could hike interest rates by 25 basis points in FY27.
In its Economic Activity for Asia Pacific report, S&P estimates consumer inflation to average 5.1 per cent in FY27.
Yann Le Pallec, President, S&P Global Ratings, and Chairman of the Board for Crisil, said India could build on its economic resilience by advancing the next phase of physical infrastructure development.
“India has a significant opportunity to convert macroeconomic resilience into sustained economic momentum. Our research suggests that the country can build on this momentum by advancing the next phase of physical infrastructure development, supported by competitive federalism, deeper capital markets and more robust financial intermediation,” Le Pallec said.
The report said infrastructure development, deeper capital markets and stronger financial intermediation would be important for India’s next phase of expansion. Indiatravel guide
It also highlighted the growth of India’s capital market over the past decade, noting that the country had combined strong economic growth with a deepening listed equity market and a broad range of companies.
As of June 30, 2026, India’s equity market stood at USD 2.03 trillion in investable market capitalisation.
At the same time, S&P Global noted that a majority of actively managed Indian funds had underperformed their respective benchmarks across multiple market cycles and economic environments.
The report also examined India’s energy security amid an uncertain global environment. More than half of India’s crude imports move through the Strait of Hormuz, leaving the country exposed to disruptions in the key waterway.
According to S&P Global, strengthening India’s energy resilience will require diversified supply sources, integrated storage and strategic reserves for crude oil, refined products and, where feasible, gas.
The report further said India’s next phase of energy transition would need to balance climate ambitions with the requirement for reliable and affordable electricity.
“We have consequently upgraded our GDP growth forecast for the current fiscal year, ending March 31, 2027, to 7 per cent, from 6.6 per cent previously,” S&P said, adding growth could ease in the second half of the fiscal year as the tailwinds from General Sales Tax rationalisation and income tax cuts diminish.
Weather-related risks warrant close monitoring. Cumulative rainfall was 15 per cent below normal till September 9, 2026, in the current monsoon season. Agricultural output and food inflation therefore remain key variables to watch, it said.
“We expect the balance of considerations to shift toward higher interest rates. Factors supporting this shift include solid growth, persistent inflationary pressures, an unresolved conflict in West Asia, and weather-related risks. We expect consumer inflation to average 5.1 per cent and the Reserve Bank of India to raise its policy rate by 25 bps in the current fiscal year,” S&P added.
Last week, another global rating agency, Moody’s too, had raised India’s GDP growth forecast for the fiscal to 7 per cent — the fastest growth rate among all G20 economies.
The 7 per cent FY27 GDP growth estimate compares with 6.7 per cent projected by the RBI and 6.4 per cent by Fitch Ratings.
The Indian economy grew at 7.8 per cent in the previous fiscal (2025-26).
Domestic rating agency Crisil on Wednesday upped its FY27 GDP growth estimate for India to 7 per cent from the earlier 6.6 per cent on expectation of strong growth in April-September period.
Its chief economist D K Joshi said the revision was made on expectations of strong growth in the first half, with the Q1 GDP growth at 7.8 per cent.
“The economy is doing strong. We expect the first half to witness fast growth, while the growth will slow down in the second half,” Joshi told reporters here.
He said the agency is assuming crude oil to average between USD 87-93 per barrel in FY27 as against USD 70 in FY26 while making growth projections.
The second factor will be monsoon, which is currently at 12 per cent below long-term averages, and likely to impact the winter crop as well. The reservoir levels and the soil moisture levels will impact the rabi or the winter crop which can have an impact on the economic growth as well.
ADB
The Asian Development Bank (ADB) also raised its forecast for India’s economic growth in the current fiscal to 7 per cent, up from 6.6 per cent projected in July, citing stronger-than-expected economic performance in the first quarter despite supply-side disruptions caused by West Asia crisis.
In its Asian Development Outlook (ADO) September 2026, the multilateral lender said, “The revision reflects India’s stronger-than-expected economic performance, with GDP expanding by 7.8 per cent year-on-year in the first quarter of FY2026 (2026-27), supported by robust investment demand, resilient consumption, and solid growth in manufacturing and service sectors.”
The economy has also benefited from lower-than-expected supply disruptions, sustained capital inflows, and limited pass-through of higher input cost to consumer prices, which helped cushion the impact of the conflict in the Middle East, the report said.
The ADB’s latest projection marks an upward revision of 0.4 percentage points from its July forecast of 6.6 per cent for FY2027.
Despite supply disruptions and high commodity prices, India’s economy continues to demonstrate resilience, supported by strong infrastructure spending and growth-supporting fiscal and monetary policies, said ADB Country Director for India Mio Oka.
“Continued strength in the services sector, including AI-related investments, alongside improvements in agricultural productivity and steady manufacturing growth, will help sustain the growth momentum,” she said.
ADB now projects FY28 growth at 7.1 per cent, slightly lower than its earlier forecast of 7.3 per cent, largely reflecting a stronger GDP base.
OECD
The Organisation for Economic Cooperation and Development (OECD) raised its 2026 (FY27) economic growth forecast for India to 7.1per cent, an 80 basis points increase from its June projection of 6.3 per cent, citing resilient domestic demand and government policies that cushioned households and firms from higher energy prices.
The OECD also raised India’s 2027 (FY28) GDP growth projection to 6.5 per cent from the earlier 6.4 per cent, though it noted that reduced purchasing power is expected to weaken growth in India through the second half of the year before a gradual recovery in 2027.
Headline inflation in India is projected to fall from 4.7 per cent in 2026 to 4.2 per cent in 2027, with the OECD noting that India is projected to temporarily raise policy rates to help offset stronger inflationary pressures, while government price support measures continue to mitigate energy price pressures in the near term.
Fitch
Fitch Ratings on Wednesday raised India’s GDP growth forecast for the current fiscal year to 6.9 per cent, from 6.4 per cent, citing strong economic growth in the June quarter and overall economic resilience.
According to Fitch, India’s economic momentum is likely to moderate over the remaining fiscal year, prompting the Reserve Bank of India (RBI) to increase interest rates by 0.25 per cent in its October monetary policy meeting.
A growth rate of 7.8 per cent in the June quarter indicates that the “Indian economy has shown resilience in the face of the shock from the US-Iran war, despite the strong terms-of-trade deterioration seen in the first half of 2026,” Fitch said.
It said that PMI survey data point to a slower pace of expansion in both manufacturing and services; below-normal monsoon rains will weigh on growth in agriculture and rural demand; and rising inflation will constrain real incomes and consumer dynamics.
“Private investment prospects look more buoyant, and we expect investment to rise by more than 10 per cent; non-food credit growth reached 19 per cent yoy in July,” Fitch added.
Overall GDP growth will be 6.9 per cent (revised up from 6.4 per cent in June), Fitch added.
“Given the combination of strong demand, price rises, and adverse supply developments, we expect the RBI to raise rates by 25 bp in October this year to 5.5 per cent. We then expect a further rise to 5.75 per cent in early 2027 and then for rates to ease back to 5.5 per cent in 2028,” Fitch said.