India's FY27 Economic Growth Likely to Moderate to 6.8% Amid Regional Tensions and Weather Risks

India Ratings and Research (Ind-Ra) has forecast India’s GDP growth at 6.8% for FY27, lower than the 7.6% growth recorded in FY26, as per The Economic Times report. The estimate is slightly above the agency’s earlier forecast of 6.7% issued in May 2026. 

The forecast takes into account the impact of higher food and fuel prices, a weaker rupee, and possible disruption to agricultural output from El Nino. The West Asia conflict could also affect food and fuel prices. 

Quarter-Wise Forecast 

Ind-Ra expects the economy to grow 6.9% in the April-June 2026 quarter and 6.6% in July-September 2026. Growth is then projected at 6.7% in October-December 2026 and 6.9% in January-March 2027. 

The RBI’s estimates for the four quarters stand at 7%, 6.4%, 6.5% and 6.8%, respectively. The central bank had raised its FY27 GDP growth forecast to 6.7% from 6.6% earlier this month. 

Oil Price Assumption 

Ind-Ra has lowered its FY27 crude oil assumption to $85 per barrel from $95 estimated in May. However, the Indian basket averaged $101.31 per barrel in the June quarter and $96.49 per barrel during April-July 2026. 

Lower crude prices can reduce the trade and current account deficit, but higher food inflation linked to El Nino could limit the benefit to economic growth. 

Rupee and Inflation 

The agency expects the rupee to average ₹93.98 against the US dollar in FY27, compared with its earlier estimate of ₹94.28. The latest forecast amounts to a 6.4% year-on-year depreciation. 

Retail inflation is projected to average 4.9% in FY27, compared with 2% in FY26. The possible effect of El Nino on agricultural output remains a factor in the inflation outlook. 

External and Fiscal Position 

Ind-Ra expects the current account deficit to widen to 1.5% of GDP in FY27 from 0.6% in FY26. It has also estimated USD 70 billion in capital flows through FCNR-B deposits and external commercial borrowings. 

The government’s 4.3% fiscal deficit target could be difficult to meet, with LPG and fertiliser subsidies adding pressure. Higher direct tax and non-tax revenue could provide some support, while weaker indirect tax collections may pose a challenge. 

Read More: Government Approves 31 Electronics Component Projects Worth ₹7,877 Crore Across 10 States! 

Conclusion 

India’s growth forecast for FY27 stands at 6.8%, below the previous year’s 7.6%. Food prices, crude oil and agricultural output remain key concerns. 

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