Moody’s Upgrades India’s FY27 GDP Growth to 7%
Why in the news
Moody’s Ratings upgraded its FY27 growth view for India, citing activity that beat expectations and the economy’s resilience to the West Asia conflict shock.
Key facts
- Q1 FY27: GDP growth of 7.8%, above RBI’s 7% forecast.
- Drivers: strong private consumption, robust gross fixed capital formation and steady services activity.
- Supports: ongoing public infrastructure outlay and an expected pick-up in private investment.
FY27 GDP forecasts compared
| Agency | Forecast (%) |
|---|---|
| Moody’s | 7.0 (highest) |
| RBI | 6.7 |
| ADB | 6.6 |
| S&P Global | 6.6 |
| Goldman Sachs | 6.5 |
| Fitch | 6.4 |
Ratings and concerns
- Other agencies’ ratings: Fitch BBB-, S&P BBB, Morningstar DBRS BBB, each with a stable outlook.
- Last year S&P lifted India one notch to BBB, a step ahead of Fitch and Moody’s.
- Weak spots: heavy general government debt, poor debt affordability and low income per head.
- Debt affordability is the portion of revenue spent on interest; India is among the weakest in its rating category.
- General government debt adds up Centre and states; S&P puts that combined deficit at 7.3% of GDP for FY27.
Exam angle
- Highest FY27 forecast: Moody’s at 7%.
- Moody’s rating: Baa3, stable.
- Define debt affordability and general government debt.