More Stories

Informist, Friday, Mar. 27, 2026

 

--Moody's: See India's GDP grow 7.3% FY26 based on new series 

--Moody's: Completed review of India's credit ratings 

--Moody's: Do not expect material reduction in India debt in next 2-3 years

--Moody's: India debt affordability to be challenged by high domestic rates 

 

MUMBAI – Moody's Ratings Friday said it expects India's gross domestic product to grow 7.3% in the financial year 2025-26 (Apr-Mar) from 7.1% in FY25, based on the new series of data recently released by the government. The ratings agency said it has completed its periodic review of India's credit ratings but did not announce any rating action. Moody's currently has a "Baa3" long-term issuer rating on India with a "stable" outlook.

 

India's growth will be supported by manufacturing, consumption, and infrastructure spending and will be higher than its peers in the Group of 20 countries. However, the agency flagged risks from the geopolitical crisis in West Asia, which could push up energy costs, widen the current account deficit, and put pressure on inflation and government finances.

 

Moody's said it does not expect a material reduction in India's debt over the next 2-3 years, highlighting continued fiscal constraints despite gradual fiscal consolidation. Moody's also said India's debt affordability will remain under pressure due to high domestic and global interest rates. 

 

The agency said India's rating balances its large, diversified economy, strong growth potential, and sound external position against high government debt, weak debt affordability, and low per capita income. The agency also said fiscal consolidation will remain gradual, with the government targeting a fiscal deficit of 4.3% of GDP in FY27, while debt reduction is expected to be slow.

 

Moody's stable outlook on India's economy arises from improving fiscal metrics after the COVID-19 pandemic and India's strong growth prospects. However, as the global macroeconomic outlook worsens, with wars raging in different parts of the world, fiscal accommodation due to revenue loss may hinder progress towards debt reduction and could compound borrowing costs.

 

India's rating may improve if the affordability of its high debt burden gets to a level consistent with its peer countries, Moody's said. Affordability of debt is likely to improve because of fiscal measures that increase revenue and narrow the fiscal deficit while also significantly reducing total debt. Further, if structural reforms are implemented effectively, which would result in considerable improvement in private-sector investment, faster growth in GDP per capita, and economic diversification, that would merit stronger evaluation of policy effectiveness and the country's credit profile.

 

The rating firm also highlighted downside risks which may result in a downgrading of India's rating, such as durably weaker growth than currently projected or a reversal in recent gains from fiscal consolidation. If the downside risks do play out, it will result in higher debt and a worsening of debt affordability. Moody's also underscored the importance of addressing any emerging financial stress promptly and effectively as failing to do so would also exert downward pressure on the sovereign rating.  End

 

Reported by Divya Moolayattil and Suryash Kumar

Edited by Rajeev Pai

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.