Global Agencies Hike India’s FY27 Growth Projections To Around 7%
The growth upgrades by these four global agencies came close on the heels of US-based Moody’s Ratings: Reports
NEW DELHI: Citing the robust economic activity across sectors in the country, leading global rating agencies such as S&P, Fitch, Asian Development Bank (ADB) and based Organisation for Economic Cooperation and Development (OECD) on Wednesday raised India’s gross domestic product (GDP) growth projections for the current fiscal up to around or over 7 per cent. While S&P Global Ratings predicted its growth projections for the current fiscal to 7 per cent, Fitch claimed its forecast for India's growth to 6.9 per cent in FY27 earlier, citing stronger-than-expected economic activity and resilience despite the shock from the US-Iran war.
At the same time, Paris-based Organisation for Economic Cooperation and Development (OECD) also upped India’s GDP growth forecast by 80 basis points to 7.1 per cent -- the highest growth rate so far projected by any international agency for FY '27. Similarly, ADB, while raising the growth forecast to 7 per cent, from 6.6 per cent estimated in July, said the Indian economy has benefited from lower-than-expected supply disruptions and sustained capital inflows, which helped cushion the impact of the conflict in the Middle East.
As far as the projections of S&P and Fitch are concerned, they predicted that inflationary pressures would push the Reserve Bank to hike policy interest rates by at least 25 basis points in the current year. S&P upgraded India’s GDP growth forecast for the current fiscal year to 7 per cent, from 6.6 percent previously, while Fitch Ratings said growth in India remains ‘very strong’ with ‘very robust’ dynamism despite the oil price shock, hiking GDP growth estimates to 6.9 per cent, from 6.4 per cent earlier.
The growth upgrades by these four global agencies came close on the heels of US-based Moody’s Ratings last week raising GDP growth forecast for the fiscal year to 7 per cent -- the fastest among all G20 economies. The Indian economy grew higher than expected at 7.8 per cent in the June quarter, driven by robust industrial activity, healthy consumption, strong goods exports, and accelerating government investment.
“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 said in a statement.
However, Fitch said in a statement that India’s economic momentum is likely to moderate over the remaining fiscal year, prompting the RBI to increase interest rates by 0.25 per cent in its October monetary policy meeting. “However, India’s inflation is expected to touch 5.5 per cent in December this year,” it said, adding that world growth is holding up well in the face of the energy price shock, but real interest rates are rising.
