MUMBAI: Robust infrastructure spending and resilient household consumption will ensure that the economy sustains an average annual growth of 6.5 percent through 2027, with the economy printing in 7 percent in 2025, Moody’s Ratings has said.
Retaining the 2025 growth projection unchanged at 7 percent, the agency said economy will clip at 6.4 percent in 2026 followed by 6.5 percent in 2027, driven by stable domestic demand and ongoing export diversification as the main growth drivers.
“We expect India and Brazil—the fastest-growing G20 economies –to grow at 6.5 percent and 2 percent, respectively, through 2027, supported by domestic and export diversification,” Moody’s noted on Thursday.
While infrastructure investments and steady consumption remain the key drivers, the agency noted that private sector capital spending—which has been missing for almost 15 years now, continues to lag, with corporates cautious about large expansions despite strong macro indicators.
“Economic growth is supported by robust infrastructure spending and solid consumption, although the private sector remains cautious about business capital spending,” it said.
The agency also pointed to the country’s success in redirecting exports after the US imposed 50 percent punitive tariffs on Indian goods from August, amid heightened trade frictions.
“Despite the near 12 percent drop in shipments to the US, following higher tariffs, overall exports grew 6.75 percent in September”, it said.
On the inflation front, the agency forecasts price index printing in 2.8 percent in 2025, followed by 3.5 percent in 2026 and 4 percent in 2027. The latest reading has inflation declining to the lowest since 2013 at 0.25 percent in October on the back of easing food prices and GST cuts.
Globally, Moody’s sees G20 economies growing at 2.5–2.6 percent during 2026–27, with emerging markets expanding around 4 percent on average, far outpacing advanced economies, which are expected to grow around 1.5 percent. The ratings firm, however, cautioned that global trade realignments and geopolitical tensions could pose risks to growth momentum.
"Geopolitical tensions, trade disruptions and political instability are amplifying uncertainty. Diverging monetary policies and fragile bond markets, prone to bouts of intense volatility, may exacerbate financial turbulence. Rapid technological advances offer productivity gains and transformative impacts across industries even as they render certain sectors and occupations obsolete," Moody's said.