OECD lifts India FY27 growth forecast to 7.1%

The OECD has increased its forecast for India's economic growth in the fiscal year 2027 by 80 basis points, now projecting a 7.1% growth rate, up from the 6.3% outlook issued in June. The Paris-based organization anticipates India's growth to decelerate from 7.8% in FY26 to 7.1% in FY27, and to 6.5% in FY28. Despite the recent robust momentum, the OECD warns that reduced purchasing power could impede growth throughout the latter half of 2026, with a gradual recovery expected in 2027.

This upgrade follows similar revisions from other prominent rating agencies. Fitch Ratings recently raised its FY27 growth forecast to 6.9% from 6.4%, while S&P Global Ratings increased its projection to 7% from 6.6%. Moody's had already revised its growth outlook to 7% from 6% earlier in the week. All these upgrades come after India reported a remarkable 7.8% GDP growth in the April-June quarter.

The positive revisions are attributed to India's resilience in the face of various global challenges. The country's expansion in the June quarter, at 7.8%, demonstrates its ability to weather the shock from the US-Iran war, despite a significant deterioration in the terms of trade in the first half of 2026. Notably, sectors such as investment, consumption, manufacturing, and services have shown strong growth, with gross fixed capital formation expanding by 11.9% in the June quarter, manufacturing rising by 9.2%, and private consumption increasing by 7.1%.

Financial, real estate, and professional services also grew by approximately 12.1%. Even though India entered FY27 facing numerous pressures typical of an oil-importing economy, including the war in West Asia, crude prices above $100 a barrel, disrupted shipping routes, global trade uncertainty, and the threat of higher US tariffs, the expected economy-wide slowdown did not materialize in the first quarter.