India to top G20 growth chart in FY27: Moody’s

The agency’s FY27 growth estimate is lower than the 6.8–7.2 per cent range projected by the Finance Ministry in the Economic Survey tabled in Parliament last month.

Moody’s Ratings has projected India’s gross domestic product (GDP) to grow by 6.4 per cent in the 2026–27 fiscal year, making it the fastest-growing economy among the G20 nations. The rating agency attributed the outlook to strong domestic consumption, supportive policy measures and a stable banking system.

In its latest outlook on India’s banking system, Moody’s said the operating environment for banks will remain strong through 2026, backed by resilient macroeconomic conditions and ongoing structural reforms. Asset quality is expected to stay healthy, although some stress may persist in the micro, small and medium enterprises (MSME) segment. However, banks are well positioned to absorb potential losses due to adequate capital buffers, it noted.

Moody’s said India’s consumption-led growth will be supported by recent policy initiatives, including the rationalisation of the goods and services tax (GST) in September 2025 and the earlier increase in personal income tax thresholds, which are expected to improve affordability and boost household spending.

The agency’s FY27 growth estimate is lower than the 6.8–7.2 per cent range projected by the Finance Ministry in the Economic Survey tabled in Parliament last month. Official estimates suggest the Indian economy is likely to expand by 7.4 per cent in the current fiscal year (2025–26), compared to 6.5 per cent growth recorded in 2024–25.

On monetary policy, Moody’s said with inflation remaining under control and growth momentum intact, the Reserve Bank of India (RBI) may consider further easing in 2026–27 only if there are clear signs of an economic slowdown. The RBI has already cut the policy rate by a cumulative 125 basis points to 5.25 per cent during 2025.