S&P Global Ratings Raises India’s GDP Growth Forecast to 7.1 Percent

S&P Global Ratings Raises India’s GDP Growth Forecast to 7.1 Percent​

New Delhi, March 25 – S&P Global Ratings on Wednesday raised India’s GDP growth forecast for the next fiscal year to 7.1 percent, citing robust private consumption, investment, and exports as key drivers. The rating agency’s assessment comes as the Middle East conflict presents a potential strain on the nation’s fiscal position due to anticipated increases in energy prices.

Revised Growth Projections​

S&P Global Ratings projects real GDP growth to moderate to 7.1 percent in the fiscal year ending in March 2027, a decrease from the 7.6 percent projected for fiscal 2026. The agency highlights resilient private consumption, a modest recovery in private investment, and strong export performance as primary contributors to this revised outlook. The 2025-26 growth forecast has been increased by 0.4 percentage points to 7.6 percent, and by 0.2 percentage points to 7.1 percent for 2026-27.

Inflation Outlook​

S&P expects inflation to rise to 4.3 percent in fiscal 2027, reflecting a normalization from historically low levels.

Impact of Middle East Conflict​

The agency notes that heightened geopolitical tensions, specifically the conflict in the Middle East, could negatively impact India’s economic outlook. The report highlights that many Asia Pacific economies, including India, are significant net energy importers reliant on Middle Eastern supplies. Higher crude prices are projected to erode purchasing power and depress domestic demand, necessitating increased government spending on subsidies and potentially straining fiscal positions.

Crude Price Assumptions​

S&P’s baseline forecasts assume Brent crude averaging USD 92 per barrel in the June quarter and approximately USD 80 per barrel for the full 2026 fiscal year. However, in a more adverse scenario, with prolonged disruptions and Brent averaging USD 185 per barrel in the June quarter and USD 130 per barrel for 2026, the central bank could respond by tightening monetary policy, potentially with a 25 basis point rate hike in the second half of the year.