S&P Global Ratings upgrades India’s FY27 growth forecast to 7% from 6.6%

According to fresh market updates, S&P Global Ratings has boosted India’s economic expansion forecast for FY27 to 7 percent from 6.6 percent earlier, citing stronger-than-anticipated industrial activity, consumption, exports and government investment in the June quarter.

“Several factors drove expansion to elevated marks than we anticipated in the June quarter,” S&P Global Ratings stated in its Asia-Pacific Economic Outlook.

These included robust industrial activity, healthy consumption, firm goods exports and accelerating government investment, prompting the ratings agency to lift its forecast by 40 basis points, it further noted

The upgrade comes after India’s economy expanded 7.8 percent year-on-year in the June quarter. S&P noted that while expansion had slowed from 8.6 percent in the preceding quarter, it remained robust and helped backing economic momentum across emerging Asia.

S&P anticipates India's expansion to stay firm beyond the current fiscal as well, forecasting GROSS DOMESTIC PRODUCT expansion of 7.2 percent in FY28 and 7 percent in FY29. Its latest estimate for FY27 is 0.4 percentage point elevated than its previous forecast, while forecasts for the following two years stay unchanged.

That stated, the agency anticipates the pace of expansion to moderate in the second half of FY27 as some of the backing from GST rationalisation and income-tax cuts fades.

Weather additionally stays a key downside risk. S&P stated cumulative rainfall was 15 percent below normal as of September 9, making agricultural output and food inflation important variables to monitor over the upcoming months.

Despite the expansion upgrade, S&P sees inflationary pressures building and anticipates the Reserve Bank of India to mobilize its policy rate by 25 basis points during FY27.

It anticipates India's consumer inflation to average 5.1 percent during the fiscal year.

S&P's projections show India's policy rate rising to 5.5 percent by the end of FY27 from 5.25 percent in FY26. It anticipates the rate to stay at 5.5 percent through FY29 before easing to 5.25 percent in FY30.

The ratings agency anticipates inflation to average 5.1 percent in FY27 before moderating to 4.7 percent in FY28 and 4.3 percent in FY29.

Domestic demand stays resilient

India is additionally among the economies where domestic demand has remained particularly resilient. S&P stated consumption expansion was especially firm in India, Indonesia, Malaysia and Taiwan, while investment momentum was firm in India alongside Australia, Indonesia, Singapore, Taiwan and Thailand.

S&P stated Indian exports had performed well recently, as overall Asia-Pacific exports continued to benefit from resilient global demand.

For Asia-Pacific as a whole, S&P boosted its 2026 expansion forecast by 20 basis points to 4.6 percent, while retaining its 2027 projection at 4.4 percent.