Moody’s has upgraded India’s fiscal 2026-27 growth outlook to 7%, citing resilience in domestic demand despite global shocks and geopolitical tensions, though risks such as rising energy costs remain.
Moody’s has lifted India’s growth outlook for fiscal 2026-27 to 7% from 6%, saying the economy has proved more resilient than it expected as the Middle East conflict unsettles oil markets and global trade. The agency now sees India expanding faster than every other G-20 economy and similarly rated emerging markets, even as it warns that higher energy costs and El Niño-linked food price pressures could still feed into inflation and slow household demand.
The upgrade comes after a stronger-than-expected first quarter, when India’s economy grew 7.8% year-on-year, helped by robust investment, manufacturing, services and domestic consumption. Reuters reported that the figure comfortably beat both the Reserve Bank of India’s forecast and market expectations, reinforcing the view that local demand is cushioning the effect of external shocks.
Moody’s move also reflects a broader shift in how India is being viewed by forecasters. LiveMint and The Times of India both reported that the agency had earlier trimmed its expectations on concern over Middle East tensions, but has now reversed course after stronger domestic activity held up through volatility in energy markets. The agency also said India’s corporate balance sheets and domestic growth engines remain supportive of the outlook.
Still, the risks are far from gone. Elevated crude prices could widen India’s import bill, pressure the rupee and leave more room for inflation to bite into consumption. Moody’s has also pointed to the possibility of a larger current account deficit, weaker remittances from the Middle East and softer external demand if the conflict drags on. That means the latest forecast is less a declaration of immunity than evidence that India is absorbing shocks better than many expected.
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