Moody’s pegs India’s GDP growth at 6.4% in FY27, fastest among G20

Global ratings agency Moody’s has projected India’s Gross Domestic Product (GDP) to grow by 6.4% in the 2026–27 financial year, marking the fastest expansion among G20 member nations, supported by strong domestic consumption and ongoing policy reforms.In its latest Banking System Outlook report, Moody’s said measures such as the rationalisation of the Goods and Services Tax (GST) in September 2025 and the earlier increase in personal income tax thresholds are expected to improve affordability for consumers and bolster consumption-led growth. “These reforms will help improve household purchasing power and support economic momentum,” the agency said.
Moody’s noted that India’s projected growth in FY27 would outpace that of other major G20 economies, including the United States, China, Germany and Brazil. However, the forecast is lower than the government’s estimate, with the Economic Survey projecting GDP growth in the range of 6.8% to 7.2% for the same period.According to the first advance estimates released by the National Statistics Office (NSO) last month, India’s economy is projected to grow at 7.4% in the current financial year. India’s GDP growth stood at 6.5% in 2024–25.
On the financial sector, Moody’s said asset quality across Indian banks is expected to remain resilient in FY27, even as some stress may emerge among Micro, Small and Medium Enterprises (MSMEs). The agency added that banks are well-capitalised and have adequate buffers to absorb potential loan losses.Meanwhile, Union Minister of State for Finance Pankaj Chaudhary informed the Lok Sabha that the gross non-performing asset (NPA) ratio of scheduled commercial banks fell to 2.15% as of the end of September 2025. He said NPAs, as a percentage of gross loans and advances for domestic operations, have been declining steadily over the past eight financial years.As per the data shared by the minister, gross NPAs of public sector banks stood at 2.50%, while private sector banks reported NPAs of 1.73% and foreign banks at 0.80%, reflecting an overall improvement in the health of the banking system.

(Business Correspondent)