Moody’s Ratings projected India’s GDP to grow at 6.4% in FY27, the fastest pace among G-20 economies, according to PTI.
“We forecast India’s real GDP will grow 6.4% for fiscal 2026-27, the fastest pace among G-20 economies, driven by strong domestic consumption and policy measures.”
GST rationalisation to lift consumption
“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 added, according to PTI.
The FY27 GDP growth estimates by Moody’s is however lower than the 6.8-7.2% range projected by the Finance Ministry’s Economic Survey tabled in Parliament last month.
RBI likely to cut rates further only on growth slowdown: Moody’s
With inflation under control and growth momentum remaining strong, Moody’s expects the RBI to further ease monetary policy in FY27 only if there are signs of a slowdown in economic activity.
The Reserve Bank of India (RBI) has lowered its policy rate by a total of 125 basis points to 5.25% in 2025 and chose to pause at the February 2026 MPC meeting.
Moody’s expects strong operating environment for banks in 2026
According to PTI, Moody’s said that the asset quality of banks is likely to remain 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 also remain strong in 2026, supported by robust macroeconomic conditions and structural reforms, it said.
Moody’s sees bank loan growth rising to 11–13% in FY27
Moody’s expects system-wide loan growth to accelerate slightly to 11-13% in FY26-27, from 10.6% in FY25-26 year-to-date.
“Corporate loan quality will remain healthy, supported by strong balance sheets and improved profitability among large companies. Recoveries will taper as banks have resolved stressed loans to large corporate,” Moody’s said according to PTI.
It further said that banks will maintain strong capitalization, supported by internal capital generation that keeps pace with asset growth. Banks’ funding and liquidity will be stable, with loans growing in line with deposits.
“We continue to expect the government to provide strong support for banks in times of need,” Moody’s added to PTI.
With the inputs from PTI