S&P Global Ratings raises India FY27 growth aim to 7% from 6.6%, estimates 25 bps RBI rate hike

S&P Global Ratings on Wednesday raised its forecast for India’s real GDP growth in the fiscal year ending March 31, 2027, to 7% from 6.6% earlier, citing stronger-than-expected growth in the June quarter, while expecting the Reserve Bank of India to raise its policy rate by 25 basis points during the fiscal.

The ratings agency said robust industrial activity, healthy consumption, strong goods exports and accelerating government investment had pushed growth above its earlier expectations in the June quarter.

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The upgrade comes despite a challenging external environment, with elevated energy prices, tighter US monetary policy and geopolitical risks clouding the outlook for Asia-Pacific economies.

S&P expects India’s growth to ease in the second half of the fiscal year as some of the boost from GST rationalisation and income tax cuts fades.

It also flagged weather-related risks, noting that cumulative rains were 15% below normal through September 9.

Agricultural output and food inflation will therefore remain key variables to watch, the ratings agency said.

S&P also expects the balance of considerations to shift towards higher interest rates in India, citing solid growth, persistent inflationary pressures, the unresolved conflict in West Asia and weather-related risks. It sees consumer inflation averaging 5.1% in the current fiscal and expects the RBI to raise its policy rate by 25 basis points.

The rate-hike expectation comes as higher oil prices threaten to put further pressure on inflation and the rupee. S&P said most Asia-Pacific currencies had weakened against the US dollar this year, with India’s currency down more than 5% through mid-September.

Despite these risks, India remains one of the stronger growth engines in the region. S&P said consumption growth was particularly strong in India, while investment momentum was also among the strongest across Asia-Pacific economies.

S&P Global Ratings’ GDP growth forecasts

Economy	2025	2026	2027	2028	2029	Change in 2026 forecast	Change in 2027 forecast
India	7.8%	7.0%	7.2%	7.0%	6.8%	+0.4 pp	0.0 pp
China	5.0%	4.3%	4.3%	4.4%	4.2%	-0.1 pp	-0.1 pp
Japan	1.2%	0.8%	0.9%	0.9%	0.7%	+0.2 pp	+0.1 pp
South Korea	1.1%	3.5%	2.7%	2.4%	1.9%	+0.6 pp	+0.5 pp
Taiwan	8.8%	10.9%	3.8%	3.5%	2.4%	+2.7 pp	+1.6 pp
Asia-Pacific	5.0%	4.6%	4.4%	4.4%	4.2%	+0.2 pp	0.0 pp

The upgrade adds to a series of bullish assessments of India’s growth prospects. Earlier this week, Jefferies had said that India was on track for real GDP growth of 6.5-7% in the current fiscal, with nominal GDP growth at around 11-12%. It also expects corporate earnings growth to accelerate to 17% next fiscal from 14%.

Meanwhile, the World Economic Forum said India had the strongest growth outlook among the geographies covered in its assessment, with resilient domestic demand supporting the economy. The WEF had raised its FY27 GDP growth forecast to 6.7% in August, while flagging higher energy prices as a risk.

Also Read: India outpaces China, Europe to emerge with strongest growth outlook globally: WEF survey

Moody’s Ratings had also raised its FY27 growth forecast for India to 7% from 6% on September 18, citing stronger private consumption, robust gross fixed capital formation, continued public infrastructure spending, signs of a revival in private investment and sustained strength in services.

S&P, however, cautioned that the broader Asia-Pacific outlook remains exposed to a potential slowdown in AI-related investment, which has been supporting the region’s technology exports, as well as persistently high energy prices and tighter US monetary policy.