Moody's Raises India's FY27 Growth Forecast To 7 Per Cent On Strong Economic Momentum

Moody's Ratings has indicated that India may be approaching a fresh private investment cycle, supported by stronger industrial activity, expanding credit and rising capacity utilisation, while maintaining its economic growth outlook of 7 per cent for FY27.

In its latest Global Macro Outlook 2027-28, the agency said robust capital goods production and imports, accelerating industrial credit growth and higher capacity utilisation suggest a revival in private capital expenditure following years of corporate and banking sector balance sheet repair.

Moody's had earlier raised India's FY27 GDP growth forecast from 6 per cent to 7 per cent on September 18, 2026, in a statement accompanying its periodic review of India's Baa3 sovereign rating. The September assessment cited stronger-than-expected economic activity and resilience to disruptions arising from the Middle East conflict.

The latest report reinforces that outlook while highlighting improving investment prospects. Moody's said a sustained private investment boom could strengthen manufacturing, employment and productivity, potentially lifting growth beyond its baseline projections.

India's resilience to global energy disruptions remains a key supporting factor. Diversified crude oil and gas supplies, state-backed oil marketing companies and tax cuts have helped cushion consumers against price shocks. The country's extensive refining capacity has also minimised fuel supply disruptions and supported petroleum product exports.

Broader economic indicators remain encouraging, with expanding manufacturing and services activity alongside double-digit year-on-year growth in GST revenue, vehicle sales and merchandise exports.

However, Moody's warned that persistent inflation, a deficient southwest monsoon and strengthening El Nino conditions could weaken agricultural output, rural demand and household consumption.

With inflation approaching the upper end of the RBI's 2-6 per cent target range, further interest rate increases could also delay the anticipated private investment recovery.

Despite these risks, Moody's expects strong domestic demand, improving investment dynamics and sound macroeconomic fundamentals to sustain India's growth near 7 per cent over the medium term.