India’s GDP growth is likely to decelerate to 6.6 percent in the fiscal year 2027 after a stronger-than-anticipated 7.7 percent expansion in FY26, a report from Crisil Ratings revealed. The moderation is attributed to several economic headwinds that are expected to weigh down consumption and overall growth.
The report highlights a sharp increase in crude oil prices following geopolitical tensions in West Asia, with average oil prices forecasted to remain elevated between $90 and $95 per barrel this fiscal year. These higher energy costs will likely translate into increased production and transportation expenses, further driving up inflation and squeezing consumer spending power.
Another significant factor contributing to the slowdown is the forecast of below-normal monsoon rainfall, with the India Meteorological Department projecting the 2026 southwest monsoon to deliver only about 90 percent of its long-term average. The potential emergence of El Niño conditions could exacerbate pressure on agricultural output, raising concerns over food supply and rural incomes.
Inflation is expected to rise sharply to 5.1 percent in FY27 from 2.1 percent in FY26, tightening household budgets and dampening private consumption growth. Producers are expected to pass on increased costs to consumers, which may push core inflation higher than the headline figures.
The report also notes that global demand will likely weaken in the coming year due to ongoing geopolitical instability, particularly the West Asia conflict, potentially impacting India’s export performance. Despite these challenges, private final consumption expenditure maintained resilience during the previous year, growing at 7.1 percent, well above its 10-quarter average of 6.4 percent, and helping sustain the economy’s momentum through early 2026.