Moody’s Projects India’s Real GDP Growth at 6.4% in FY27
Strong domestic demand, rising investments and stable financial conditions expected to anchor expansion
India, Feb 09 : India is set to remain one of the world’s fastest growing major economies, with Moody’s projecting real GDP growth of 6.4% for the financial year 2026–27 the highest among G-20 nations. The rating agency said the anticipated expansion would provide a durable macroeconomic base, strengthening financial stability and supporting credit demand across sectors.
The outlook is underpinned by resilient domestic consumption, a pickup in investment activity and broadly stable economic indicators. These factors are expected to bolster corporate sentiment while encouraging businesses to continue borrowing for expansion.
Moody’s noted that favourable economic conditions should keep the financial system steady over the next 12 to 18 months. Asset quality is likely to remain stable, and corporate balance sheets are expected to stay robust, enabling banks to preserve adequate capital buffers through internal accruals even as lending grows.
Credit growth is projected to track overall economic momentum, supported by consistent profitability within the banking sector. Liquidity is also expected to improve, with deposit inflows broadly matching loan demand.
However, the report flagged selective risks. Retail lending is forecast to stay stable particularly among high-quality borrowers though outcomes may differ based on underwriting practices and borrower profiles. Banks could also face increasing competition for deposits, potentially complicating efforts to secure low-cost funding.
Operating conditions for micro, small and medium enterprises are likely to strengthen gradually, especially for export-oriented firms, following the India–US trade agreement signed in February 2026. The deal is expected to ease external pressures and reduce the likelihood of stress within the segment.
Overall, Moody’s said the projected growth trajectory reinforces India’s role as a key engine of global economic activity, with solid fundamentals positioned to sustain financial resilience in the near term.
