Summary:
S&P Global Ratings raised India’s FY27 GDP growth forecast to 7% from 6.6%, citing strong June-quarter growth, consumption, exports and government investment. The agency also expects a 25 basis-point RBI rate hike, while inflation, weather and energy risks remain key concerns.
S&P Global Ratings has raised its forecast for India’s real GDP growth in FY27 to 7% from 6.6% earlier, citing stronger-than-expected economic activity in the June quarter. The ratings agency also expects the Reserve Bank of India (RBI) to raise its policy rate by 25 basis points during FY27.
India Growth Outlook Strengthens
India’s economy grew 7.8% year-on-year in the June quarter, compared with 8.6% in the preceding quarter. S&P said robust industrial activity, healthy consumption, strong goods exports and accelerating government investment pushed growth above its earlier expectations.
S&P’s latest forecasts show India growing 7% in 2026, 7.2% in 2027, 7% in 2028 and 6.8% in 2029. The agency raised its 2026 forecast by 0.4 percentage point, while its 2027 forecast remains unchanged.
| 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 |
Growth May Moderate in Second Half
S&P expects India’s growth momentum to ease in the second half of FY27 as some of the boost from GST rationalisation and income-tax cuts fades. However, domestic demand remains resilient, with consumption growth and investment momentum among the stronger performers across the Asia-Pacific region.
Indian exports have also performed well as regional exports continue to benefit from resilient global demand.
RBI Rate Hike and Inflation Outlook
S&P expects consumer inflation to average 5.1% in FY27, before moderating to 4.7% in FY28 and 4.3% in FY29. It expects the RBI policy rate to rise from 5.25% in FY26 to 5.5% by the end of FY27, implying a 25 bps hike.
The agency cited solid growth, persistent inflationary pressures, the unresolved conflict in West Asia and weather-related risks as factors that could support higher interest rates. India’s rupee had also weakened by more than 5% against the US dollar through mid-September, while elevated energy prices could add to inflationary pressure.
Weather and Global Risks Remain
S&P noted that cumulative rainfall was 15% below normal through September 9, making agricultural output and food inflation important variables to monitor.
For Asia-Pacific, S&P raised its 2026 growth forecast to 4.6% from 4.4%, while retaining its 2027 forecast at 4.4%. The agency also flagged risks from a potential slowdown in AI-related investment, persistently high energy prices and tighter US monetary policy.
