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Informist, Wednesday, Mar. 25, 2026

 

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--S&P raises India FY27 GDP growth forecast by 40 bps to 7.1% 
--S&P raises India FY28 GDP growth forecast by 20 bps to 7.2% 
--S&P raises India FY29 GDP growth forecast by 20 bps to 7.0% 
--S&P:Pvt consumption, modest recovery in pvt invest to support India growth 
--S&P: Downside risks prevail for India's growth from geopolitical tensions 
--S&P: Expect fuel prices in India to rise if crude oil prices remain high 
--S&P: See 25-bps rate hike in India if crude oil averages $130/bbl in 2026 
--S&P: Expect RBI to hold rates steady, maintain neutral stance in base case 
--S&P: Expect CPI inflation in India to rise to 4.3% in FY27 from 2.5% FY26

 

NEW DELHI – S&P Global Ratings has raised its forecasts for India's GDP growth in the next three financial years, with growth seen driven by "resilient private consumption, a modest recovery in private investment, and solid exports". S&P, however, warned that risks to the outlook persist from the ongoing war in West Asia.

 

The rating agency raised the growth forecast for the financial year starting Apr. 1 by 40 basis points to 7.1%. It also expects growth to be higher by 20 bps each in FY28 and FY29 at 7.2% and 7.0%, respectively.  

 

India's economy expanded 7.8% in the December quarter, based on the new GDP series with FY23 as the base year. The government's second advance estimate projects FY26 GDP growth at 7.6%. 

 

S&P is the second rating agency to upgrade India's growth forecast in March after Fitch Ratings, which raised its GDP growth projection for FY27 by 30 bps to 6.7%. Economists, meanwhile, have lowered projections for India's growth in FY27 to around 6.5% due to sharply higher crude oil prices amid the US-Israel war on Iran.

 

"But downside risks prevail, primarily due to the renewed geopolitical tensions and persistent trade-related uncertainties," S&P said in its Asia-Pacific economic outlook. "These risks could affect India through fluctuations in commodity prices, trade volumes, and capital flows."

 

S&Ps expect CPI inflation in India to rise to 4.3% in FY27 from a projected 2.5% in FY26. India's retail inflation rose to 3.21% in February from 2.74% a month earlier.

 

"Higher crude prices will likely widen the trade deficit, but a healthy surplus in services trade should help contain the current account deficit," S&P said. "Overall, we expect the central bank to hold rates steady and maintain a neutral stance." 

 

The Reserve Bank of India's Monetary Policy Committee is widely expected to keep the policy repo rate steady at 5.25% in the April meeting. The prolonged war in West Asia and higher crude oil prices have led to a rise in expectations that the rate-setting panel may have to raise interest rates sooner than previously expected. 

 

According to S&P, in an unfavourable scenario in which crude oil averages almost $130 a barrel in 2026, the RBI "would likely tighten policy in response to energy-price inflation". In such a scenario, S&P expects one 25-bps rate hike in the second half of 2026. In S&P's base case, the RBI will only raise interest rates in FY28 by a modest 25 bps.  End

 

Reported by Shubham Rana

Edited by Avishek Dutta

 

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