Moody’s ups growth forecast for India to 7%, cautions high inflation

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Agency cautions that possible rate hikes could delay private investment recovery amid inflation pressures and monsoon risks

By Shishir Sinha

Updated - November 11, 2026 at 02:00 PM. | New Delhi

Moody’s Ratings on Wednesday upped India’s growth forecast to 7 per cent for fiscal year 2026-27 from 6.5 per cent. However, it has cautioned that a possible policy interest rate hike could impact private investment.

“India’s broad-based economic momentum and demonstrated resilience to the energy supply shock warrant upward revisions to our 2026-27 growth forecasts to 7 per cent from 6.5 per cent,” the agency said in its latest edition of ‘Global Macro Economic Outlook 2027-28.’ This is in line with various agencies increasing the growth forecast.

Earlier, the Reserve Bank of India (RBI) raised its real GDP growth forecast for the 2026–27 financial year (FY27) by 40 basis points to 7.1 per cent (up from its previous estimate of 6.7 per cent). Prior to that, the World Bank raised India’s growth forecast for the current fiscal by 50 basis points to 7.1 per cent. Prior to that, the Asian Development Bank (ADB) and the OECD and other global agencies like S&P and Fitch raised India’s FY27 GDP growth projection to around 7 per cent, boosted by robust June quarter economic activity and resilient domestic demand despite the West Asia conflict. Paris-based Organisation for Economic Co-operation and Development (OECD) upped its GDP growth forecast by 80 basis points to 7.1 per cent for FY27.

Meanwhile, Moody’s said that robust consumption, improving investment dynamics and strong macroeconomic fundamentals imply that the economy appears well positioned to sustain growth near 7 per cent over the medium term. “A sustained private investment boom that materially boosts manufacturing, employment and productivity could lift growth rates above our baseline,” it said.

However, it highlighted headwinds as near-term risks persist. Household consumption remains vulnerable to intensifying and broadening price pressures, with headline inflation now close to the upper end of the RBI’s 2-6 per cent target range, while a deficient southwest monsoon and strengthening El Niño conditions will likely weigh on agricultural output and rural demand. “With the RBI on track to raise rates further, tighter monetary policy could delay the recovery in private investment,” it said.

In its policy review statement last month, the RBI’s MPC said the near-term outlook on inflation points towards continued pressures from the supply side, on account of the deficient Southwest monsoon, El Niño conditions and high volatility in international oil prices. Price pressures are increasingly becoming visible across a range of commodities within the food component, apart from oil. In addition, early signs of inflation becoming generalised are also evident from the increase in core inflation and higher inflation across a larger segment of the CPI basket.

Considering all factors, CPI inflation for 2026-27 is projected to be 5.2 per cent with Q2 at 4.9 per cent; Q3 at 6.0 per cent; and Q4 at 5.7 per cent. Inflation for Q1:2027-28 is projected at 5.6 per cent with risks being evenly balanced. Core inflation is projected at 4.4 per cent for 2026-27, RBI said.

Published on November 11, 2026

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