S&P Global, ADB Raise India’s FY27 Growth Forecast To 7% As Fitch Sees 6.9%

S&P Global and the Asian Development Bank (ADB) have raised their forecasts for India’s economic growth in FY2026-27 to 7 per cent, while Fitch Ratings has lifted its projection to 6.9 per cent, citing stronger-than-expected economic activity, resilient consumption and continued investment.

S&P Global raised its FY27 forecast from 6.6 per cent, pointing to stronger-than-expected activity in the first half of the financial year. Industrial activity, consumption, goods exports and government investment are supporting the expansion. However, S&P expects growth to moderate in the second half as the impact of GST rationalisation and income tax cuts fades.

ADB also raised its growth forecast to 7 per cent from 6.6 per cent, driven by stronger-than-expected activity, including 7.8 per cent growth in Q1 of FY27.

The agencies have also flagged several risks to India’s outlook. S&P Global said weather conditions could affect growth, with cumulative rainfall 15 per cent below normal through September 9. A weaker monsoon could hurt agricultural output and put additional pressure on food prices.

Higher crude oil prices are another concern, particularly amid the wider energy shock. S&P warned that elevated energy costs could push inflation higher, while possible El Niño conditions could add to food-price pressures. Although inflation remains within India’s target range, the agency said price pressures are building because of higher energy and food costs.

S&P expects some monetary policy tightening, forecasting 25-basis-point rate increases in India and several other Asia-Pacific economies during the remainder of 2026. Higher US interest rates could also put pressure on Asian currencies and increase the risk of capital outflows.

India, Indonesia, the Philippines and Thailand had each seen their currencies depreciate by more than 5 per cent through mid-September, according to S&P. The combination of elevated crude prices, higher inflation, currency weakness and tighter global financial conditions could weigh on the wider regional outlook.

Fitch separately raised its FY27 growth forecast to 6.9 per cent from 6.4 per cent. It said India’s economy expanded 8.6 per cent year-on-year in the first quarter of calendar 2026 before slowing to 7.8 per cent in the second quarter, though growth still exceeded its earlier expectations.

Fitch expects expansion to moderate through the rest of FY27 because of slower manufacturing and services growth, below-normal monsoon rainfall and rising inflation. At the same time, it expects investment to grow by more than 10 per cent, while non-food credit growth reached 19 per cent year-on-year in July.

Fitch has forecast India’s GDP growth at 6.5 per cent for FY2027-28, while warning that inflation and monetary policy will remain key factors shaping the outlook.