Moody’s sees India’s GDP growth at 6.4% in FY27

Strong domestic consumption, policy measures and a stable banking system would drive the growth, it noted in its banking system outlook report.

The FY27 GDP growth estimates by Moody’s are lower than the 6.8-7.2 per cent range projected by the Finance Ministry’s latest Economic Survey.

India’s GDP will grow at 6.4 per cent in FY27, the fastest pace among G-20 economies, Moody’s Ratings projected recently.
Strong domestic consumption, policy measures and a stable banking system would drive the growth, it noted in its banking system outlook report.
The operating environment for banks will remain strong in 2026, supported by robust macroeconomic conditions and structural reforms.

Moody’s asset quality will stay resilient, with some stress among micro, small and medium enterprises (MSMEs). Regardless, banks have sufficient reserves to absorb loan losses, it said.

The operating environment for banks will remain strong in 2026, supported by robust macroeconomic conditions and structural reforms, it said.

“The rationalisation of the goods and services tax (GST) in September 2025 and an earlier increase in personal income tax thresholds will help improve affordability for consumers and support consumption-led growth,” Moody’s said.

With inflation under control and growth momentum remaining strong, Moody’s anticipates the central bank will further ease monetary policy in FY27 only if there are signs of a slowdown in economic activity.

Moody’s expects system-wide loan growth to accelerate slightly to 11-13 per cent in FY27 from 10.6 per cent in FY26 year to date.

Banks will maintain strong capitalisation, backed by internal capital generation that keeps pace with asset growth. Their funding and liquidity will be stable, with loans growing in line with deposits, Moody’s added.

Fibre2Fashion (DS)