Moody's Raises India GDP Growth Forecast To 7% For 2026-27

India's economy has proven to be more resilient than expected in the face of global disruptions, leading credit rating agency Moody’s to raise its forecast for real GDP growth in the fiscal year 2026-27 to 7% from its previous estimate of 6%. The ratings agency cited stronger domestic consumption, ongoing infrastructure investment, robust capital formation, early indications of recovery in private investment, and continued momentum in the services sector as key factors contributing to the upward revision.

According to Moody’s, India's real GDP growth accelerated to 8.2% year-on-year during the first half of 2026, compared to 7.3% growth for the entire year in 2025. This performance surpasses expectations set by several other major institutions, including the International Monetary Fund (IMF), which projected a growth rate of 6.4% for FY27, and S&P Global Ratings, which forecasted 6.6%.

Moody’s highlighted that domestic demand remains a critical driver of India's economic performance. Private consumption has shown improvement, while substantial public infrastructure expenditure continues to fuel investment activity. The agency also expects private-sector investment to gain further momentum in the coming months.

Despite the positive outlook, Moody’s maintained a stable rating outlook for India, retaining its Baa3 long-term issuer rating with a stable outlook. The agency attributes this rating to India's "large and diversified economy with high growth potential, a sound external position, and the government’s stable domestic financing base." However, Moody’s also cautioned that there are challenges ahead, such as high government debt levels, weak debt affordability, and low per capita income.