India’s GDP growth is projected to ease to 6.6% in fiscal year 2027 following a robust 7.7% expansion in fiscal 2026, as per a report by Crisil Ratings. Factors such as a surge in crude prices, below-normal monsoon, and higher inflation are anticipated to impact consumption and overall growth.
The report attributed the better-than-expected growth in fiscal 2026 to fiscal backing for private consumption, rate reductions by the Reserve Bank of India, strong global growth, low inflation, favorable monsoon, and reduced crude oil prices. However, in FY27, these factors are expected to turn unfavorable, exerting pressure on growth.
Crude oil prices have escalated to their highest levels in a decade due to the West Asia crisis and are forecasted to remain elevated this fiscal year, averaging $90-95 per barrel, according to Crisil Intelligence. The India Meteorological Department (IMD) has predicted below-normal rainfall at 90% of the long-period average during the 2026 southwest monsoon season, indicating a potential impact on agricultural output.
The report also anticipates a significant uptick in inflation to 5.1% in fiscal 2027 from 2.1% in fiscal 2026, which is likely to strain private consumption. Producers are expected to transfer the increased costs of energy, inputs, trade, and transportation to consumers, potentially leading to higher core inflation. Moreover, weakened global demand stemming from the West Asia conflict is expected to affect India’s exports negatively.
Despite challenges from the West Asia conflict, India’s growth momentum persisted, with private final consumption expenditure (PFCE) growth standing at 7.1%, slightly lower than the previous quarter’s 8.2%. This growth rate surpassed the 10-quarter average of 6.4%.
