Moody’s Ratings has projected India’s economy to grow at 6.4% in FY27, positioning the country as the fastest-growing major economy among the G20 nations. The outlook is supported by steady domestic consumption, ongoing policy reforms, and a resilient banking sector, according to the agency’s latest assessment.

The projection was outlined in Moody’s banking system outlook released on February 9, 2026, which highlighted India’s strong macroeconomic fundamentals despite a challenging global environment.

FY27 Growth Outlook

Moody’s expects India’s real GDP to expand by 6.4% in FY27, driven primarily by internal demand and supportive government initiatives. The agency noted that consumption-led growth, coupled with improvements in financial sector stability, continues to underpin India’s economic momentum.

How the Projection Compares with Official Estimates

The FY27 growth forecast is slightly below the range of 6.8% to 7.2% projected by the Ministry of Finance in the Economic Survey presented to Parliament. Official data suggests that India’s GDP growth is expected to accelerate to 7.4% in FY26, up from 6.5% recorded in FY25.

Banking Sector Health and Asset Quality

Moody’s assessment indicates that asset quality across India’s banking system is likely to remain stable, although certain stress pockets may persist within the micro, small, and medium enterprises (MSME) segment. The report added that banks are adequately provisioned and hold sufficient buffers to absorb potential credit losses.

Credit Growth and Interest Rate Environment

System-wide credit growth is projected to rise to the 11%–13% range in FY27, compared with 10.6% growth recorded so far in FY26. With inflation largely contained, any further easing of monetary policy in FY27 would depend on signs of a broader economic slowdown.

The Reserve Bank of India has already lowered the policy repo rate by a cumulative 125 basis points during 2025, bringing it down to 5.25%.

Capital Strength and Liquidity Position

According to Moody’s, Indian banks are expected to maintain comfortable liquidity and funding profiles, with deposit growth broadly matching loan expansion. Capitalisation remains well supported by internal capital generation and stable earnings from large corporate borrowers.

Summary

Moody’s has forecast India’s GDP growth at 6.4% in FY27, the highest among G20 economies, supported by strong domestic demand and a resilient banking system. While the estimate is slightly below official projections, stable asset quality, healthy credit growth, and adequate bank capitalisation are expected to sustain India’s economic momentum.

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