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Informist, Wednesday, May 6, 2026

 

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--S&P Global: India FY27 growth seen 6.6%, vs earlier estimate of 7.1% 
--CONTEXT: Comments by S&P Global analysts in India Forward report 
--S&P Global: India FY27 GDP growth seen lower on impact from West Asia war 
--S&P Global: Inflation under control in India but likely to rise 
--S&P Global: See India inflation rising to 5.1% in FY27 from 2.0% in FY26 
--S&P Global: India debt-GDP ratio can rise to 57.5% in FY27 from 56.1% FY26 
--S&P Global: Higher India debt-GDP to delay medium-term consolidation aim 
--S&P Global: India needs comprehensive energy storage policy 

 

NEW DELHI - India's GDP growth is expected to slow down to 6.6% in the current financial year from 7.6% in FY26, according to analysts at S&P Global. Growth this year is seen slower than the earlier forecast of 7.1?cause of the impact of the war in West Asia, S&P Global said.

 

The war and the disruption of energy supplies will also push up inflation in India and put pressure on fiscal policy, S&P Global said in the 'India Forward' report.

 

"Financial conditions have tightened, bond yields have risen, inflation is moving up, currency has weakened, capital outflow continues," said Dharmakirti Joshi, chief economist at Crisil, a subsidiary of S&P Global. "All these things have implications for growth," Joshi said at a press conference. 

 

S&P Global projects retail inflation in India to rise to 5.1% in FY27 from 2% last year because of higher food and fuel prices. "Inflation is still under control but likely to move up," Joshi said. Higher energy prices are also likely to widen India's current account deficit to 2.2% this year from an estimated 0.8% in FY26, Joshi added.

 

Asked if higher inflation would push the Reserve Bank of India to raise interest rates, Joshi said the central bank would not be in a hurry to tighten right now. Only when inflation becomes entrenched and starts showing up in core inflation, the RBI's Monetary Policy Committee may consider higher rates. 

 

The stress from the war in West Asia may start to show up in India's fiscal policy, with both the fiscal deficit and debt-to-GDP ratio seen rising, S&P Global said in the report. "India's post-COVID fiscal consolidation – reducing the fiscal deficit from 9.2% of GDP in FY2021 to 4.4% FY2025-26 — now faces its toughest challenge," the report said.

 

S&P Global projects the central government's debt-to-GDP ratio to rise to 57.5% in FY27 from 56.1% FY26. The Union Budget projected the central government debt to fall to 55.6% of GDP in FY27. A rise in debt-to-GDP ratio will delay the government's goal to reduce the ratio to 49-51% of GDP by FY31. "To meet this objective, the Indian government may need to reduce its infrastructure-linked capital expenditure, a key driver of growth in recent years," S&P Global said. 

 

The global energy disruption caused by the war in Iran will have "far-reaching and long-lasting consequences", S&P Global said. This could challenge India's dual vision of becoming a developed economy by 2047 and achieving net-zero emissions by 2070, the report said. 

 

India needs a comprehensive energy storage policy and the West Asia war offers an opportunity to accelerate the energy reform agenda, S&P Global said. India's immediate attention should be on increasing the number of domestic energy sources, the report said.  End

 

Reported by Shubham Rana

Edited by Avishek Dutta

 

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