![Despite the weakened informal sector contributing to half or more of the GDP, data indicates that its growth continues to surpass the indicators of the formal sector during FY23-FY25 and in the first quarter of FY26 [Representative Image: iStock]](https://thefederal.com/h-upload/2025/09/14/619435-indian-economy.webp "Despite the weakened informal sector contributing to half or more of the GDP, data indicates that its growth continues to surpass the indicators of the formal sector during FY23-FY25 and in the first quarter of FY26 [Representative Image: iStock]")
Moody's upgrades India's FY27 growth outlook to 7 pc
Moody's cites robust consumption, improving investment and resilience to energy supply shocks, but flags inflationary pressures and monsoon-related risks to growth
New Delhi, Nov 11 (PTI) Moody's Ratings on Wednesday said the Indian economy is expected to grow at a higher rate of 7 per cent in the current fiscal, led by broad-based economic momentum and energy supply shock resilience.
In its Global Macro Outlook 2027-28, Moody's, however, said that near-term risks to growth persist as household consumption remains vulnerable to "intensifying and broadening price pressures", with headline inflation close to the upper end of the Reserve Bank of India's (RBI) 2-6 per cent target range, while a deficient southwest monsoon and strengthening El Nino conditions will weigh on agricultural output and rural demand.
"India's broad-based economic momentum and demonstrated resilience to the energy supply shock warrant upward revisions to our 2026-27 growth forecasts to 7 per cent from 6.5 per cent," it said.
Robust consumption, improving investment dynamics and strong macroeconomic fundamentals imply that the economy appears well positioned to sustain growth near 7 per cent over the medium term, Moody's said.
A sustained private investment boom that materially boosts manufacturing, employment and productivity could lift growth rates above Moody's baseline projections.
"With the RBI on track to raise rates further, tighter monetary policy could delay the recovery in private investment," Moody's added.
India has adjusted to the energy price shock better than previously assumed, helped by its ability to diversify crude and gas supplies and buffer consumers from the immediate price impact through state-backed oil marketing companies and tax cuts.
India is also home to the world's largest single-site refining complex, and its large and sophisticated refining capacity has helped limit fuel supply disruptions while supporting its role as a major exporter of refined petroleum products, Moody's added.
"High frequency indicators, including robust capital goods production and imports, accelerating industrial credit growth and rising capacity utilisation, suggest that India may be at the cusp of a new private capex cycle after several years of corporate and banking- sector balance sheet repair," the US-based agency said.
Broader economic activity also remains solid amid expanding manufacturing and services purchasing manager indexes and double-digit year-on-year growth in goods and services tax revenue, vehicle sales and merchandise exports, it added. PTI