Archive · 18 Aug 2026
India Ratings Raises FY27 Growth Forecast Amid Economic Risks
India Ratings and Research now expects India’s economy to grow by 6.8% in the 2026-27 financial year.
This is slightly higher than its earlier forecast of 6.7%.
However, the agency expects growth to be slower than the estimated 7.6% growth in the previous financial year.
A weather pattern called El Niño could weaken farming and raise food prices.
Conflicts and other problems around the world could also hurt India’s economy.
Lower oil prices may help growth, but the agency says weather-related risks could offset some of that benefit.
People’s spending is expected to grow more slowly because rural incomes may be affected.
Investment is expected to remain strong, supported mainly by government spending.
The Reserve Bank of India is expected to keep interest rates and its policy stance unchanged.
India Ratings and Research raised its FY27 GDP growth forecast to 6.8% from 6.7%.
The agency expects FY27 growth to remain below the NSO’s provisional 7.6% estimate for FY26.
El Niño, geopolitical tensions, inflation, currency weakness and weak global trade are key downside risks.
Agriculture GVA growth is projected to slow to 2%, while CPI inflation is expected to average 4.9%.
Private consumption growth is forecast to ease to 7.2%, while fixed investment growth is projected at 8%.
- Who
- India Ratings and Research, led on the briefing by Chief Economist Devendra Kumar Pant.
- What
- The agency raised its GDP growth forecast for India in FY27 to 6.8% from 6.7%.
- When
- The revised forecast was announced on Tuesday for financial year 2026-27.
- Where
- New Delhi, India.
- Why
- The forecast was raised partly because crude oil prices have fallen, although El Niño, geopolitical tensions, inflation and other risks remain.
Factors Supporting Growth
Risks Limiting Growth
Economic expansion
Factors Supporting Growth
India Ratings raised its forecast to 6.8%, citing lower oil prices as a positive factor for growth.
Risks Limiting Growth
The agency expects growth to remain below the NSO’s provisional 7.6% estimate for FY26 because of a strong base effect and external risks.
Agriculture and rural demand
Factors Supporting Growth
Government capital expenditure is expected to help sustain fixed investment growth at 8%.
Risks Limiting Growth
El Niño and a weak monsoon could reduce agricultural output, weaken rural incomes and slow private consumption growth to 7.2%.
Inflation outlook
Factors Supporting Growth
The agency expects CPI inflation to moderate to 5% in the fourth quarter of FY27 after peaking earlier.
Risks Limiting Growth
Food prices and consumer food inflation are expected to remain elevated, while WPI inflation is projected to rise sharply to 8.5%.
- FY27 GDP forecast
- 6.8%, up from 6.7% in the agency’s May estimate
- FY26 GDP estimate
- 7.6%, according to the National Statistical Office’s provisional estimate
- FY27 crude oil assumption
- $85 per barrel, reduced from the earlier $95 forecast
- Agriculture GVA growth
- Projected to slow to 2% in FY27 from 3% in FY26
- FY27 CPI inflation
- Expected to average 4.9%, with retail inflation peaking at 5.9% in the third quarter
- Private consumption growth
- Projected at 7.2% in FY27, down from 7.7% in FY26
- Current account deficit
- Projected to widen to 1.5% of GDP in FY27 from 0.6% in FY26