India Ratings and Research (Ind-Ra) raised its FY27 gross domestic product (GDP) growth forecast to 6.8% from 6.7%, while projecting a slowdown from the 7.6% expansion recorded in FY26, according to the agency's latest report. The upward revision of 10 basis points follows the Reserve Bank of India's own forecast increase earlier this month to 6.7% from 6.6%, citing the resilience of the domestic economy.
Growth outlook
Ind-Ra, a Fitch Group company, said its FY27 projection is marginally higher than its earlier estimate of 6.7% made in May 2026. The agency expects growth to slow from FY26's 7.6% amid uncertainty surrounding the West Asia conflict, which could put upward pressure on fuel and food prices, while a weaker rupee and the possible impact of El Nino on agricultural output could weigh on economic activity.
The agency projects quarterly GDP growth for FY27 as follows:
| Quarter | GDP growth forecast |
|---|---|
| April-June | 6.9% |
| July-September | 6.6% |
| October-December | 6.7% |
| January-March | 6.9% |
Crude oil and rupee assumptions
Ind-Ra expects the Indian basket crude oil price to average USD 85 per barrel in FY27, lower than its previous assumption of USD 95 per barrel made in May. It has also projected the rupee to average Rs 93.98 to the US dollar during the fiscal year, compared with its earlier forecast of Rs 94.28 — representing a 6.4% year-on-year depreciation.
Devendra Pant, Ind-Ra Chief Economist and Head of Public Finance, said crude oil prices had remained elevated in the early part of FY27.
The crude oil price of the Indian basket averaged USD 101.31/bbl in the June quarter of FY27 and USD 96.49/bbl for April-July 2026.
Our crude oil price assumption for FY27 is USD85/bbl. Lower oil prices positively impact the Indian economy by reducing the trade/current account deficit (CAD). However, higher inflation due to El Nino may limit growth upside from lower oil prices.
Pant also projected capital flows of USD 70 billion through foreign currency non-resident bank deposits (FCNR-B) and external commercial borrowings (ECBs).
Inflation and current account risks
Ind-Ra expects retail inflation to average 4.9% in FY27, sharply higher than the 2% recorded in FY26. The agency also projected India's current account deficit to widen to 1.5% of GDP in FY27 from 0.6% in the previous fiscal year.
Fiscal pressures
On the fiscal front, Ind-Ra said meeting the government's FY27 fiscal deficit target of 4.3% of GDP could prove difficult, particularly because of subsidies for liquefied petroleum gas and fertilisers. While stronger direct tax collections and non-tax revenue could help the government meet its fiscal target, weaker-than-expected indirect tax collections could pose a challenge, Pant said.
The revised forecast highlights the balancing act facing policymakers: lower crude oil prices support the current account, but El Nino-driven inflation may cap growth gains. With the RBI already trimming its own forecast gap to just 10 basis points below Ind-Ra's, the FY27 trajectory hinges on crude oil movements, monsoon patterns and fiscal discipline in the coming quarters.
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