Moody’s Lowers India FY27 Growth Estimate to 6% Amid West Asia Energy Disruptions

Moody’s Ratings has reduced India’s GDP growth forecast for FY27 to 6%, from 6.8% earlier, as per PTI reports. The revision comes amid expectations of slower consumption, weaker industrial activity, and moderation in capital formation. 

India had recorded 7.5% growth in calendar year 2025, compared with 7.2% in 2024. The latest estimate indicates a slowdown as external factors begin to affect domestic activity. 

Exposure to West Asia 

India depends heavily on West Asia for energy supplies. The region accounts for about 55% of crude oil imports and more than 90% of liquefied petroleum gas (LPG). 

Ongoing conflict has disrupted supply flows, particularly LPG shipments. This is to affect availability in the near term and raise fuel and transport costs across sectors. 

Impact on Prices 

The report indicates that higher fuel costs may feed into broader inflation. Fertiliser imports, which are linked to global energy prices, could push up food prices. 

Inflation is projected to average 4.8% in FY27, compared with 2.4% in FY26. While current levels remain contained, risks have increased due to global developments. 

Fiscal and External Position 

Higher oil and fertiliser prices are expected to increase subsidy spending. At the same time, reduced fuel tax collections and pressure on corporate earnings may affect revenue. 

India’s current account deficit, estimated at 0.4% of GDP in 2025, is expected to widen to around 1–1.5% over the next two years, driven by higher import costs. 

Other Projections 

The OECD has projected growth at 6.1% for the current fiscal. ICRA has estimated 6.5%, citing elevated energy prices. 

An assessment by EY suggests growth could weaken further if the conflict continues. 

Read More: India’s FY26 Toll Collection: Rises 14% to ₹82,900 Crore Driven by FASTag and Road Expansion! 

Conclusion 

The revision points to pressure from external factors, particularly energy supply disruptions. Higher import costs and inflation risks are expected to influence growth and fiscal conditions in the coming year. 

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