new delhi, April 22
Amid the ongoing West Asia crisis leading to disruptions in the global economy, Moody’s Ratings has downgraded India’s growth forecast for FY27 to 6 per cent from 6.8 per cent estimated earlier.
The credit rating agency has cited weaker consumption and industrial activity amid elevated energy prices and rising input costs following the Middle East conflict.
In a report titled, “Middle East Conflict – India: Energy shock fuels external, inflationary and sectoral risks”, Moody’s said, “In light of India’s economic exposure to the military conflict in the Middle East, we expect real GDP growth to ease to 6 per cent in fiscal 2026–27, from an earlier projection of 6.8 per cent, driven by more subdued private consumption and softer industrial activity amid elevated energy prices and higher input costs.”
Moody’s said higher energy costs are expected to push up inflation and strain fiscal balances, as the government may need to increase spending on fuel and fertiliser subsidies.
“Fertilizer and cooking gas shortages will constrain agricultural activity and household consumption, key components of India’s economy,” it said.
As a major importer of crude oil, liquefied natural gas (LNG), and liquefied petroleum gas (LPG), India remains vulnerable to sustained price pressures.
At the sectoral level, Moody’s said the oil marketing companies (OMCs) and fuel-dependent industries are expected to be the most affected.
