Moody’s cuts India’s growth forecast to 6% for 2026-’27 citing Iran war impact

Global ratings agency Moody’s has cut India’s economic growth estimate for the financial year 2026-’27 to 6% from 6.8% forecast earlier, citing the effects of the war in West Asia, PTI reported.

In its credit opinion on India published on March 31, the agency said that prolonged disruptions, especially of liquefied petroleum gas supply, would cause near-term shortages at the household level. It also warned of increased fuel and transport costs, and spillovers to food inflation because of the country’s dependence on imported fertilisers.

Moody’s said that the slashing of real gross domestic product growth to 6% in the current fiscal year would be driven by “subdued private consumption, softer industrial activity and a weakening in the momentum of gross fixed capital formation amid elevated prices and higher input costs”, PTI reported.

The agency predicted that the average inflation in India will rise to 4.8% in 2026-’27, up from 2.4% in 2025-’26. “While inflation remains contained for now, geopolitical risks have tilted the inflation outlook to the upside,” PTI quoted the Moody’s report as saying.

The ratings agency predicted that policy rates are likely to be kept steady or raised gradually in 2026-’27, depending on how long the conflict lasts and the extent to which its effects pass to fuel and food...

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