S&P revises India's GDP growth projection for FY27 to 6.6%

S&P Global on Wednesday lowered India’s GDP growth projection for the current financial year to 6.6 per cent from its earlier estimate of 7.1 per cent, citing disruptions in trade and energy flows along with rising inflationary pressures stemming from the ongoing conflict in West Asia.In its latest ‘India Forward’ report, prepared jointly with Crisil,the agency said the prolonged conflict in the Middle East poses a significant challenge to India’s economic resilience.“The Middle East war represents the biggest test of India’s resilience in recent years, with the largest energy shock on record triggering spillovers into freight and insurance costs, supply chains and fertilisers,” the report stated.
According to the report, India’s economic growth, which averaged 7.3 per cent between FY23 and FY26, is expected to moderate sharply in the current fiscal year. The country’s GDP growth for the financial year ended March 2026 has been pegged at 7.6 per cent.Crisil Chief Economist Dharmakirti Joshi said the disruption in energy supplies is likely to push India’s retail inflation to 5.1 per cent in FY27, compared with around 2 per cent in the previous year.“Food and fuel will be key drivers,” Joshi said, adding that inflationary pressures are expected to intensify in the coming months.He further noted that Wholesale Price Index (WPI)-based inflation is likely to surpass Consumer Price Index (CPI)-based retail inflation, indicating a stronger impact of rising prices on businesses and manufacturing activity.
Despite a sharp rise in crude oil prices since the onset of the Iran conflict on February 28, retail fuel prices in India have largely remained unchanged. Joshi said the impact of higher energy prices is expected to reflect in inflation data from April onwards.The report also highlighted that the prolonged nature of the West Asia conflict is shifting India’s risk management priorities from short-term cushioning measures to medium- and long-term strategic planning.India’s post-pandemic fiscal consolidation efforts could also come under pressure, the report noted. The country had reduced its fiscal deficit from 9.2 per cent of GDP in 2020-21 to 4.4 per cent in 2025-26, but sustaining that trajectory may become more challenging amid rising external risks.Deepa Kumar said the ongoing conflict has intensified concerns around energy and food security reforms.“The conflict has put a spotlight on energy and food security reforms,” Kumar said, underlining the need for structural resilience in the Indian economy amid mounting geopolitical uncertainties.

(Business Correspondent)