New Delhi: Moody’s Ratings on Wednesday raised its growth forecast for the Indian economy to 7 per cent from 6.5 per cent earlier, for the financial year 2026-27 on the back of “India’s broad-based economic momentum and demonstrated resilience to the energy supply shock”.
In its Global Macro Outlook 2027-28, Moody’s said that India had adjusted to higher energy prices better than previously anticipated, supported by its ability to diversify crude oil and natural gas supplies and limit the immediate impact on consumers. State-backed oil marketing companies and tax cuts have helped cushion households and businesses from the energy price shock.
The revised outlook comes after India’s economy expanded 7.8 per cent year-on-year in the April-June quarter, exceeding market expectations. An investment boom and strong manufacturing activity added to resilient consumer demand, supporting growth despite external economic pressures.
“High frequency indicators, including robust capital goods production and imports, accelerating industrial credit growth and rising capacity utilisation, suggest that India may be at the cusp of a new private capex cycle after several years of corporate and banking- sector balance sheet repair,” the Moody’s report stated.
Broader economic activity also remains solid amid expanding manufacturing and services purchasing manager indexes and double-digit year-on-year growth in goods and services tax revenue, vehicle sales and merchandise exports, the report said.
The rating agency, however, said that near-term risks to growth persist as household consumption remains vulnerable to “intensifying and broadening price pressures”, with headline inflation close to the upper end of the Reserve Bank of India’s (RBI) 2-6 per cent target range, while a deficient South-West monsoon and strengthening El Nino conditions will weigh on agricultural output and rural demand.
Strong consumption, improving investment and sound macroeconomic fundamentals should help India sustain growth near 7 per cent over the medium term, the agency said.
A sustained private investment boom that materially boosts manufacturing, employment and productivity could lift growth rates above Moody’s baseline projections.
“With the RBI on track to raise rates further, tighter monetary policy could delay the recovery in private investment,” Moody’s added.
India is also home to the world’s largest single-site refining complex, and its large and sophisticated refining capacity has helped limit fuel supply disruptions while supporting its role as a major exporter of refined petroleum products, Moody’s added.
(IANS)
