S&P Raises FY27 GDP Forecast to 7.1% Amid Global Risks

S&P Global Ratings on March 25, 2026 has updated and raised the India’s GDP growth forecast for FY27 to 7.1%. The upgrade comes after the strong private consumption, improving investment and steady export performance. However the global agency has cautioned the rising geopolitical tensions especially in the Middle East could pose the risks.

S&P’s Latest GDP Forecast for India

The latest Asia-Pacific economic outlook by S&P Global Ratings presents the balanced view of India’s growth story.

Key Growth Projections

• FY26 GDP growth: Revised upward to 7.6%
• FY27 GDP growth: Estimated at 7.1%

Growth expected to be moderate slightly but remain strong globally

Main Growth Drivers

• Resilient private consumption which is supporting demand
• Gradual recovery in the private investment
• Stable export performance and especially in services

What Is Driving India’s Economic Growth?

India’s economic strength is currently driven by the multiple internal factors.

1. Strong Domestic Consumption

• Rising incomes and urban demand
• Government welfare schemes which are boosting spending
• Stable inflation (currently moderate levels)

2. Investment Recovery

• Increased the capital expenditure (Capex) by government
• Gradual pickup in private sector investments
• Infrastructure push for the long-term growth

3. Export Strength

• Growth in services exports (IT, digital services)
• Diversification of trade markets

Key Risks Highlighted by S&P

While the outlook is still positive S&P has warned of several global and domestic risks.

Rising Geopolitical Tensions

• Ongoing Middle East conflict may disrupt oil supply
• Impact on the global trade routes like Strait of Hormuz

Higher oil prices can increase import bills, also widen the trade deficit and will raise inflation levels

Impact on Inflation and Fiscal Health

S&P has projected a gradual rise in inflation in the coming years.

Inflation Outlook

• Expected inflation in FY27: 4.3%
• Driven by energy prices and demand recovery

Fiscal Pressure

Higher oil prices may force the government to,

• Increase fuel subsidies
• Manage fiscal deficit carefully

Question

Q. According to S&P Global Ratings, India’s GDP growth forecast for FY27 is,

A. 6.5%
B. 7.1%
C. 7.6%
D. 8.0%