India's GDP growth likely to moderate to 6.6 pc in FY27: Report
New Delhi, June 6
India's GDP growth is expected to moderate in FY 2027 at 6.6 per cent after a stronger‑than‑expected 7.7 per cent expansion in fiscal 2026, a report has said.
The report from Crisil Ratings said that a sharp rise in crude prices, a below‑normal monsoon and higher inflation will weigh on consumption and growth.
"Growth outperformed expectations in fiscal 2026 due to fiscal support to private consumption, rate cuts by the Reserve Bank of India, healthy global growth, low inflation, favourable monsoon and low crude oil prices," the report said.
In FY27, many of these factors are expected to turn adverse and weigh on growth, it added.
Crude oil prices have surged to decadal highs after the onset of the West Asia crisis and are expected to remain high this fiscal, averaging $90-95 per barrel, according to Crisil Intelligence.
The India Meteorological Department (IMD) has expected rainfall at 90 per cent of the long-period average in the 2026 southwest monsoon season, indicating below-normal rains.
The likelihood of El Niño conditions will add to the pressure on agricultural production.
The report forecasted inflation to rise sharply to 5.1 per cent in fiscal 2027 from 2.1 per cent in fiscal 2026, putting pressure on private consumption.
Producers are expected to pass on the sharp rise in the cost of energy and other inputs, as well as trade and transportation, to consumers, which will likely raise core inflation.
Global demand is expected to be weaker this year due to the West Asia conflict and this will likely impact India's exports, the report said.
Notably, the growth momentum in India sustained despite headwinds from the West Asia conflict that began towards the end of February and intensified in March.
Private final consumption expenditure (PFCE) growth remained healthy at 7.1 per cent vs 8.2 per cent in the previous quarter. It was far higher than the 10-quarter average of 6.4 per cent.
— IANS
Reader Comments
7.7% in FY26 is impressive, but I’m skeptical if that momentum can last. The report says rate cuts by RBI helped, but inflation at 5.1% next year will hit middle-class families hard. My household budget is already stretched with petrol prices, and if crude stays at $90+, everything from transport to groceries will become costlier. 😟
Interesting numbers from Crisil. The global context is key here—West Asia conflict, crude prices, weak global demand. India is not isolated from these shocks. However, I think domestic resilience is underappreciated. The PFCE growth at 7.1% shows Indians are still spending, which is a good sign. Hope the government maintains fiscal discipline without cutting welfare.
"Growth outperformed expectations" – feels like we're patting ourselves on the back a bit too much. The real question is: is this growth inclusive? I live in a tier-2 city and while the IT sector booms, small businesses and local manufacturers are struggling with input costs. If inflation spikes to 5.1%, the common man will feel the pinch more than any GDP figure suggests.
Every time I read about El Niño and below-normal monsoon, my heart sinks. Agriculture employs so many people, and a bad monsoon means not just food prices but also rural distress. The report says producers will pass on costs to consumers, but what about farmers? They need better crop insurance and MSP support. 6.6% growth is fine, but not at the cost of the farming community. 🙏
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