India Ratings lifts FY27 growth forecast to 6.8% amid oil price gains

India Ratings and Research on Thursday raised its gross domestic product growth forecast for FY27 to 6.8%, attributing the upgrade primarily to crude oil prices settling below earlier projections. The lower energy costs are expected to ease input expenses and support consumer purchasing power across the economy.

Despite the positive revision, the rating agency flagged multiple headwinds that could constrain economic momentum in the coming fiscal year. El Niño weather patterns pose risks to agricultural output and rural incomes, while sticky inflation remains a concern for policymakers calibrating monetary policy responses.

Geopolitical tensions in West Asia and escalating trade protectionism globally present additional uncertainties that could impact India's export performance and foreign investment flows, the agency noted. The combination of these factors suggests growth could face pressure if any materialise significantly, warranting careful monitoring by economists and policymakers throughout the fiscal year.

The upgraded forecast reflects India's resilience and the structural support from energy price moderation, but underscores the importance of navigating multiple external challenges to sustain the projected growth trajectory.