S&P upgrades India growth outlook to 7% for FY27, expects RBI rate hike

S&P Global Ratings has upgraded India's fiscal 2027 GDP growth projection to 7 percent from its previous estimate of 6.6 percent, citing sustained economic strength across multiple sectors. The revision comes as the Indian economy expanded at 7.8 percent in the June quarter, outpacing earlier expectations and reflecting broad-based growth momentum.

According to S&P's latest Economic Activity for Asia Pacific report, several factors have underpinned the upgraded outlook, including robust industrial activity, resilient consumer spending, strong merchandise exports, and accelerating government capital expenditure. The agency projects consumer inflation will average 5.1 percent during the fiscal year, providing some pricing stability for households and businesses.

However, S&P cautioned that growth could moderate in the second half of the fiscal year as temporary policy tailwinds diminish. The agency cited the waning impact of Goods and Services Tax rationalization measures and income tax relief announced in recent years as headwinds that could temper expansion in coming months.

The ratings firm flagged weather-related risks as an area requiring close attention, with cumulative rainfall running significantly below historical norms in several regions. Such meteorological variations could impact agricultural output and broader economic activity, S&P noted, warranting continued monitoring through the remainder of the fiscal year.