Global agencies see India’s growth ringing louder; raise FY27 GDP forecasts on upbeat demand and investment sentiment
India’s FY27 growth outlook has received upgrades from the OECD, Asian Development Bank, S&P Global Ratings and Fitch Ratings, with forecasts now ranging from 6.9% to 7.1% amid strong domestic demand, investment, services and exports. The revisions follow 7.8% GDP growth in the June quarter, though institutions flagged risks from geopolitical uncertainty, weather disruptions and rising inflation,…
Multiple international agencies have revised their growth forecasts for India in fiscal year 2027, citing robust domestic demand, heightened investments, and improved export performance. The Asian Development Bank, OECD, S&P Global Ratings and Fitch Ratings have all increased their respective projections for FY27. The OECD raised India's growth forecast to 7.1% from 6.3%, while the ADB raised its estimate to 7% from 6.6%, S&P Global Ratings from 6.6% to 7% and Fitch Ratings from 6.4% to 6.9%.
Despite supply disruptions and high commodity prices caused by the West Asia conflict, India's economy has remained resilient, thanks to strong infrastructure spending and favorable fiscal and monetary policies, according to Mio Oka, ADB's country director for India. Strong investment demand, resilient consumption, and solid growth in manufacturing and services sectors have contributed to this resilience.
The upgrades come after India reported stronger-than-expected GDP growth of 7.8% in the June quarter, driven by increased investment, steady consumption, and solid growth in manufacturing and services sectors. High-frequency indicators suggest strong economic momentum. Investment, corporate sales, and exports have all risen significantly.
High growth is expected to be driven by the services sector, including AI-related investments, improvements in agricultural productivity, and steady manufacturing growth. Domestic demand is projected to remain the main driver of growth in FY27 and FY28, supported by strong tax collections, low interest rates, rising household incomes and anticipated revisions to government salaries and pensions in FY28.
However, risks to the growth outlook persist, including prolonged geopolitical uncertainty, El Nino-related disruptions and weaker monsoon expected to impact agricultural production. Inflation remains within the Reserve Bank of India's target range but pressures from energy and food prices are building. The central bank expects inflation to average 5% for FY27, while various agencies forecast between 4.7% and 5.5%.
The RBI is expected to raise its policy rate by 25 basis points during the current fiscal year to counter rising inflationary pressures.
Written by urgent.news from The Economic Times - Economy's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
