NEW DELHI: India’s growth outlook has received a broad upgrade from major global institutions, with the OECD, S&P Global Ratings, Fitch Ratings and Asian Development Bank (ADB) raising their GDP forecasts for the current financial year.The upgrades follow stronger-than-expected economic growth in the April-June quarter, when India’s GDP expanded 7.8%. Resilient domestic demand, investment, manufacturing activity and government spending have supported growth despite the impact of the West Asia conflict and higher energy prices.The OECD raised its FY2026-27 growth forecast for India to 7.1%, from 6.3% projected in June. The 80-basis-point upgrade puts the OECD’s forecast above those of S&P, Moody’s and ADB, which are all at 7%, while Fitch expects 6.9% growth.The Reserve Bank of India’s FY27 growth estimate stands at 6.7%, compared with the economy’s 7.8% growth in FY26.OECD raises India growth forecast to 7.1%In its September Interim Economic Outlook, the OECD said growth in emerging-market economies such as India had been supported by resilient domestic demand and government policies that cushioned households and businesses from higher energy prices.“Despite recent strong momentum, reduced purchasing power is also expected to weaken growth in India through the second half of this year, before a gradual recovery takes place in 2027. In annual terms, growth is projected to fall from 7.8 per cent in fiscal year (FY) 2025-26 to 7.1 per cent in FY 2026-27 and 6.5 per cent in FY 2027-28,” the OECD said.The OECD expects India’s inflation to average 4.7% in 2026 and said government price-support measures would help contain the impact of higher energy costs in the near term.It also said global economic prospects remain “heavily dependent” on whether a durable resolution to the Middle East conflict is achieved.“Persistent uncertainty about the evolution of the Middle East conflict remains a key risk to the baseline projections,” the OECD said.S&P, Fitch also raise FY27 forecastsS&P Global Ratings raised its FY27 growth forecast to 7%, from 6.6%, citing robust industrial activity, consumption, goods exports and accelerating government investment.It expects growth to ease in the second half of the fiscal year as the impact of GST rationalisation and income-tax cuts fades.S&P also projected consumer inflation at 5.1% in FY27 and said the Reserve Bank of India could raise its policy rate by 25 basis points during the fiscal year.“We have consequently upgraded our GDP growth forecast for the current fiscal year, ending March 31, 2027, to 7 per cent, from 6.6 per cent previously,” S&P said.“We expect the balance of considerations to shift toward higher interest rates. Factors supporting this shift include solid growth, persistent inflationary pressures, an unresolved conflict in West Asia, and weather-related risks. We expect consumer inflation to average 5.1 per cent and the Reserve Bank of India to raise its policy rate by 25 bps in the current fiscal year,” S&P added.Fitch Ratings raised its FY27 growth forecast to 6.9%, from 6.4%, citing strong June-quarter growth and the resilience of the Indian economy.The agency expects private investment to strengthen, with investment growth projected at more than 10%.“Given the combination of strong demand, price rises, and adverse supply developments, we expect the RBI to raise rates by 25 bp in October this year to 5.5 per cent. We then expect a further rise to 5.75 per cent in early 2027 and then for rates to ease back to 5.5 per cent in 2028,” Fitch said.Fitch expects inflation to rise in the short term, with headline inflation projected to reach 5.5% in December 2026. It expects inflation to ease towards the RBI’s target thereafter, reaching 4.2% by the end of 2027.Fitch expects the rupee to remain broadly around current levels against the US dollar for the rest of 2026, before depreciating slightly next year.“World growth is holding up well in the face of the energy price shock, but real interest rates are rising,” Fitch said, while raising its global GDP growth forecast by 20 basis points to 2.6%.ADB raises growth forecast to 7%The Asian Development Bank also raised its FY27 growth forecast to 7%, from 6.6% estimated in July. It cited stronger-than-expected first-quarter performance, robust investment and consumption, and solid growth in manufacturing and services.“The revision reflects India’s stronger-than-expected economic performance, with GDP expanding by 7.8 per cent year-on-year in the first quarter of FY2026 (2026-27), supported by robust investment demand, resilient consumption, and solid growth in manufacturing and service sectors,” the ADB said.“Continued strength in the services sector, including AI-related investments, alongside improvements in agricultural productivity and steady manufacturing growth, will help sustain the growth momentum,” ADB Country Director for India Mio Oka said, news agency PTI reported.ADB expects FY28 growth at 7.1%, slightly lower than its earlier 7.3% projection, largely because of the stronger base created by higher FY27 growth.The multilateral lender expects domestic demand to remain the main driver of growth, supported by tax collections, low interest rates, rising household incomes and the expected revision of government salaries and pensions.Moody’s had also raised forecastMoody’s Ratings last week raised its FY27 real GDP growth forecast to 7% from 6%, citing India’s resilience amid the Middle East conflict.“Although we continue to expect India to grow faster than all other G-20 economies, as well as similarly rated emerging market sovereigns, risks remain,” Moody’s said.The agency warned that elevated energy prices and El Niño-related food price pressures could weigh on inflation, consumption and growth.India’s economy grew 7.8% in the April-June quarter, with strong investment and manufacturing activity helping offset weakness in mining and consumer-facing services, Reuters reported.Despite the upward revisions, the agencies have flagged several risks for the Indian economy. Higher crude and energy prices could increase inflation and put pressure on household purchasing power.Below-normal monsoon rains could affect agricultural output and rural demand, while prolonged geopolitical tensions could disrupt supply chains and raise input costs.
