Crisil lifts India FY27 growth forecast to 7% on strong H1 momentum

Indian rating agency Crisil has revised its GDP growth forecast for India in fiscal year 2027 upward to 7%, up from the previous 6.6% estimate. This optimistic outlook is backed by robust performance during the first half of the fiscal year, with strong consumer spending, investment, and government expenditure buoying the economy despite a volatile global environment.

However, Crisil also warns that a stronger El Nino season and rising energy costs could reignite inflation in a country where food prices significantly impact households. The Reserve Bank of India may face tighter room for maneuvering monetary policy as growth remains robust.

Crisil Chief Economist D K Joshi explained that the agency anticipates faster growth in the first half of 2027, with momentum slowing down in the latter half. The projections are based on expected GDP growth of 7.8% in the first quarter. Crisil assumes crude oil prices averaging $87-93 per barrel in 2027, compared to $70 per barrel in 2026.

The monsoon performance and subsequent impact on winter and rabi crops are significant variables, with weaker farm output potentially reducing economic growth. These weather risks were also highlighted by the Asian Development Bank, which cautioned that a potent El Nino combined with high energy prices could result in a dual supply shock for developing Asia, affecting agricultural yields, hydropower generation, and price pressures.