New Delhi, Sep 18: India remains on course for strong economic growth in the current financial year, with Moody’s Ratings raising its FY27 GDP growth forecast to 7 per cent from 6 per cent earlier, citing the economy’s resilience in the face of global uncertainties.

The rating agency said India’s growth momentum has remained supported by robust domestic demand, higher private consumption, continued infrastructure investment and sustained strength in the services sector. The economy has also shown the ability to absorb external shocks, including the impact of heightened geopolitical tensions and disruptions linked to the conflict in the Middle East.

According to Moody’s, India’s real GDP growth accelerated to 8.2 per cent year-on-year in the first half of calendar 2026, compared with 7.3 per cent for the full year in 2025. Stronger consumption, healthy gross fixed capital formation and continued public investment in infrastructure have provided a firm foundation for economic activity.

The agency also sees signs of a possible revival in private sector investment, which could further strengthen the growth cycle as businesses respond to improving domestic demand and investment opportunities.

With the revised projection, India is expected to maintain a relatively strong growth trajectory compared with other G20 economies and similarly rated emerging-market sovereigns. However, Moody’s has also highlighted several risks that could influence the pace of expansion during the remainder of FY27.

A prolonged conflict in the Middle East could keep global energy prices elevated and put additional pressure on domestic inflation. Moody’s has projected average inflation at 4.8 per cent for FY27, considerably higher than the 2.4 per cent recorded in FY26.

Food prices could also face upward pressure if El Nino-related weather disruptions affect agricultural output. Higher food and fuel costs could weigh on household purchasing power and private consumption, potentially moderating economic activity.

India’s diversified crude oil import sources, substantial foreign exchange reserves and strong domestic demand provide important buffers against external shocks. At the same time, a rise in energy and fertiliser import costs, softer external demand and weaker remittance inflows from the Middle East could put pressure on the current account and affect overall growth momentum.

On the fiscal side, Moody’s said the government has maintained a measured approach to responding to the external shock, reflecting its focus on fiscal consolidation. The Centre has set a target of bringing the central government fiscal deficit down to 4.3 per cent of GDP in FY27 from 4.4 per cent in the previous financial year.

The rating agency said India’s ‘stable’ outlook reflects expectations of gradual improvement in fiscal metrics alongside resilient growth prospects. However, it cautioned that significant fiscal accommodation in an uncertain global environment could slow progress on debt reduction and add to concerns over debt affordability.

The latest assessment comes amid a series of positive developments in India’s sovereign credit profile. Earlier this month, Japanese credit rating agency JCR upgraded India’s sovereign rating to ‘A-’, citing strong economic growth and the resilience of the country’s financial system.

S&P and Fitch also retained India’s investment-grade ratings last month, pointing to the country’s fast-growing economy, policy stability and continued investment in infrastructure.

India’s domestic growth data has provided further support to the optimistic outlook. The economy expanded 7.8 per cent in the June quarter of FY27, surpassing the Reserve Bank of India’s earlier estimate of 7 per cent.

The latest projections underline the importance of domestic consumption, infrastructure spending, services and a potential recovery in private investment in sustaining India’s growth momentum. At the same time, global energy prices, food inflation, geopolitical developments and fiscal conditions will remain important factors shaping the country’s economic performance through FY27.