S&P Global has projected India's economic growth to fall 110 basis points in fiscal year 2027, while forecasting higher inflation and expecting the Reserve Bank of India (RBI) to begin raising the repo rate in the second half of the financial year.
In its latest Asia-Pacific economic commentary released on Wednesday, the ratings agency estimated India's real GDP growth at 6.6% for fiscal year 2027, down from 7.7% in fiscal year 2026, citing energy-related pressures, expectations of a below-normal monsoon and slowing global economic growth.
The growth forecast is in line with the RBI's latest projection. Earlier this month, RBI Governor Sanjay Malhotra revised the central bank's fiscal year 2027 growth estimate to 6.6% from 6.9%, warning that prolonged global supply chain disruptions, financial market volatility and weather-related shocks continue to pose downside risks.
S&P Global also raised its inflation outlook for India, forecasting consumer price inflation at 5.1% in fiscal year 2027 compared with its earlier estimate of 4.9%. The agency expects manufacturers to pass on higher energy costs to consumers, while recent increases in administered fuel prices, including petrol, diesel and cooking gas, are also likely to add to inflationary pressures.
Given the expected rise in inflation, S&P Global believes the RBI will begin raising the repo rate from October, marking the start of monetary policy tightening in the second half of the financial year.
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The agency noted that India's current account deficit is expected to widen amid higher energy imports and a weaker rupee. However, it said recent policy measures aimed at attracting foreign capital have helped stabilise the Indian currency against the US dollar.
Across the Asia-Pacific region, S&P Global said economic growth has largely held up in early 2026, supported by resilient exports and domestic demand. It revised higher growth forecasts for economies benefiting from the artificial intelligence-led technology export boom, including Taiwan, South Korea, Vietnam, Singapore, China, Malaysia, Thailand and Japan.
However, the agency warned that higher energy prices remain a significant challenge for the region, particularly for economies dependent on energy imports from West Asia. While governments have taken steps to shield consumers from the full impact of higher global fuel prices, increased production costs are expected to feed through to inflation across several economies.
S&P Global also noted that China's export outlook remains relatively strong despite continued weakness in its domestic economy, weighed down by a sluggish property market, fiscal restraint and subdued consumer confidence.
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