India Ratings and Research (Ind-Ra) has upgraded India's FY27 GDP growth forecast to 6.8%, representing a slight improvement from the earlier estimate of 6.7% made in May 2026. According to The Economic Times, this forecast is lower than the 7.6% growth recorded in FY26, as the agency takes into account multiple headwinds including higher food and fuel prices stemming from the West Asia conflict uncertainty, a weaker rupee, and possible disruption to agricultural output from El Niño. The upgrade was primarily driven by lower-than-projected global crude oil prices, with the agency lowering its baseline crude oil price assumption for FY27 to $85 per barrel, down from its earlier forecast of $95 per barrel. As noted by Devendra Kumar Pant, chief economist at Ind-Ra, for every $10 per barrel drop in oil prices, there is a 44 basis point uptick to growth, though monsoon-related aspects have reduced this benefit. The agency's projection comes after the Reserve Bank of India raised its FY27 GDP growth forecast earlier this month to 6.7% from 6.6%, citing the resilience of the domestic economy. India Ratings and Research, a Fitch Group subsidiary, has also revised its average crude oil price assumption for FY27 to $85 per barrel, with the Indian basket crude oil price averaging $101.31 per barrel in the June quarter of FY27 and $96.49 per barrel for April-July 2026.
Ind-Ra has provided detailed quarterly GDP growth projections for FY27, with quarterly growth expected at 6.9% for April-June, 6.6% for July-September, 6.7% for October-December and 6.9% for January-March. According to The Economic Times, these projections align closely with the RBI's corresponding forecasts of 7% for Q1, 6.4% for Q2, 6.5% for Q3 and 6.8% for Q4. The agency's projection comes after the Reserve Bank of India raised its FY27 growth forecast from 6.6 per cent to 6.7 per cent earlier this month, citing resilience in the domestic economy. Despite the growth upgrade, Ind-Ra highlighted several significant downside risks that could temper economic momentum, with El Niño weather patterns posing particular risks to agricultural output and food prices.
Ind-Ra projects significant inflationary pressures ahead, with retail inflation expected to average 4.9% in FY27, compared with 2% in FY26. According to the agency's mid-year economic outlook report, Consumer Price Index (CPI) retail inflation is forecast to average 4.9%, with retail inflation expected to peak at 5.9% in Q3FY27 before moderating to 5% by Q4FY27. The agency expects the RBI to maintain the status quo on both policy rates and the monetary policy stance for the rest of FY27. Private consumption expenditure, which accounts for more than half of GDP, is expected to grow 7.2% in FY27, slower than 7.7% in FY26. As noted by Devendra Kumar Pant, crude oil prices had remained elevated in the early part of FY27, with the Indian basket crude oil price averaging $101.31 per barrel in the June quarter of FY27 and $96.49 per barrel for April-July 2026. The possible effect of El Niño on agricultural output remains a factor in the inflation outlook, with higher food inflation linked to weather conditions potentially limiting the benefit from lower crude oil prices to economic growth.
Ind-Ra projects significant currency depreciation, with the rupee expected to average ₹93.98 to the US dollar during FY27, compared with its earlier forecast of ₹94.28. This would represent a 6.4% year-on-year depreciation. The agency expects capital flows of $70 billion through foreign currency non-resident bank deposits (FCNR-B) and external commercial borrowings (ECBs). External risks remain elevated with the current account deficit (CAD) projected to widen to 1.5% of GDP in FY27 from 0.6% in FY26. As reported by The Economic Times, Megha Arora, director at Ind-Ra, highlighted concerns around the US announcement to levy up to 100% tariffs on India regarding Russian crude purchases, noting that while the US Senate has passed the bill and it is yet to become law, it remains a critical risk factor to monitor for India's trade trajectory. The agency expects gross fixed capital formation (GFCF) to grow at 8% in FY27, largely sustained by public sector capital expenditure, with the central government expected to stick to its fiscal deficit target of 4.3% of GDP.
