India’s GDP Forecast for FY27 Cut to 6.6% by S&P Global Amid Inflation Concerns

S&P Global Ratings placed India’s real GDP growth at 6.6% for FY27, a 110-basis-point drop from 7.7% in FY26. The revision is part of the agency’s Asia-Pacific Q3 2026 economic outlook, published on June 24, 2026. 

Three Reasons Behind the GDP Forecast Cut

S&P Global attributed the revision to three factors:

• Crude oil dependence: India sources 88% of its oil from overseas. Rising global prices increase the import bill and put upward pressure on consumer prices
• Monsoon deficit: El Niño has weakened rainfall, with the deficit at 43% as of June 22. State governments have drawn up contingency plans recommending alternative crops
• Slower global demand: Weaker external conditions and supply chain pressures are limiting growth across import-dependent economies

GDP and Inflation Estimates Compared

S&P Global’s Forecast Aligns With RBI’s Revised Estimate

The RBI cited global supply chain disruptions, financial market volatility, and weather-related risks as downside factors.

• Inflation Forecast Raised to 5.1%

Two channels are driving the increase: 

• Manufacturers are passing on higher input costs to consumers
• Government-administered price increases on petrol, diesel, and cooking gas. 

Higher fertiliser costs are an additional factor, weighing on food production and keeping food prices under pressure.

• Repo Rate Hike Expected From October

S&P Global expects the RBI to begin raising the repo rate from October. The repo rate is the rate at which the RBI lends to commercial banks and influences borrowing costs across the financial system.

• Current Account Deficit Likely to Widen

Higher crude imports and a weaker rupee are expected to put pressure on India’s current account, the difference between what the country earns through exports and inflows versus what it spends on imports and outward payments. 

S&P Global noted that recent policy steps to attract foreign capital have provided some support to the rupee.

Final Outlook

S&P Global’s FY27 projection pairs slower growth with higher inflation, leaving limited room for monetary easing. October will be the first inflexion point, when the RBI’s rate decision and monsoon outcomes will together shape how the second half of the fiscal year unfolds.

Source: https://www.moneycontrol.com

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