S&P Global Ratings Raises India FY27 Growth Forecast to 7% From 6.6%

India’s economic growth forecast for FY27 has been upgraded to 7% from 6.6% by S&P Global Ratings following the performance of India in the quarter of June which exceeded the expectations of the ratings agency. 

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The upgrade comes in light of India posting 7.8% GDP growth on a year-on-year basis in the first quarter of the fiscal year. The economic growth rate was however below the 8.6% growth witnessed in the previous quarter. 

Industrial activity, consumption, goods exports and government investment were among the factors that supported the upgrade. The revised FY27 estimate is 40 basis points above S&P’s earlier forecast. 

S&P has left its projections for the following two years unchanged. It expects India’s economy to grow 7.2% in FY28 and 7% in FY29. 

The ratings agency does, however, expect growth to ease in the second half of FY27 as some of the support from GST rationalisation and income-tax cuts begins to fade. 

Weather remains another variable to watch. Cumulative rainfall was 15% below normal as of September 9, leaving agricultural output and food inflation exposed to how conditions develop over the coming months. 

Alongside the stronger growth outlook, S&P sees inflation becoming firmer. 

Consumer inflation is projected to average 5.1% in FY27, before moderating to 4.7% in FY28 and 4.3% in FY29. 

That inflation view also feeds into S&P’s interest-rate expectations. The agency expects the Reserve Bank of India to raise the policy rate by 25 basis points during FY27, taking it to 5.5% by the end of the fiscal year from 5.25% in FY26. 

S&P expects the policy rate to remain at 5.5% through FY29 before easing to 5.25% in FY30. 

India also stood out in S&P’s regional assessment for the strength of domestic demand. Consumption growth was described as particularly strong in India, Indonesia, Malaysia and Taiwan, while investment momentum remained firm in India along with Australia, Indonesia, Singapore, Taiwan and Thailand. 

Exports were another support. S&P noted that Indian shipments had performed well recently as Asia-Pacific exports continued to benefit from resilient global demand. 

For the wider Asia-Pacific region, S&P lifted its 2026 growth forecast by 20 basis points to 4.6%, while keeping its 2027 estimate unchanged at 4.4%.