S&P Global Ratings on Wednesday, 23 September 2026, raised its India GDP growth forecast for FY27 to 7 per cent, up from its earlier projection of 6.6 per cent, citing a stronger-than-expected performance in the June quarter. The upgrade makes India one of the fastest-growing major economies in the current global cycle.

What Drove the Upgrade

The ratings agency attributed the upward revision to a confluence of positive domestic drivers: robust industrial activity, healthy consumption, strong goods exports, and accelerating government investment. India's official GDP data had already signalled momentum, with the first quarter of FY27 clocking growth of 7.8 per cent — a figure that has since prompted multiple institutions to revise their outlooks upward.

'Several factors drove growth to higher levels than we expected in the June quarter. We have consequently upgraded our GDP growth forecast for the current fiscal year, ending March 31, 2027, to 7.0 per cent, from 6.6 per cent previously,' S&P Global Ratings said in its note.

Second-Half Caution: Tailwinds May Fade

Despite the upgrade, S&P Global flagged that growth could moderate in the second half of the fiscal year. The agency noted that tailwinds from GST rationalisation and income tax cuts are expected to diminish as the year progresses. This suggests the full-year outturn will depend heavily on whether private consumption and exports sustain their current pace independently of policy stimulus.

Monsoon Deficit and Agricultural Risk

Weather-related risks remain a material concern. Cumulative rainfall was 15 per cent below normal as of 9 September 2026 in the current monsoon season, according to S&P Global. The agency flagged agricultural output and food inflation as key variables that warrant close monitoring, as any further deficit could weigh on rural demand and push up consumer prices.

Asia-Pacific and China in Context

The India upgrade comes against a broader Asia-Pacific backdrop that S&P Global described as resilient. The agency's 2026 baseline GDP growth forecast for Asia-Pacific stands at 4.6 per cent — 0.2 percentage points higher than its estimate a quarter ago — with 2027 growth seen at 4.4 per cent. A tech export boom and supportive macroeconomic policy are cited as the primary props.

For China, S&P Global forecasts real GDP growth of 4.3 per cent in both 2026 and 2027, constrained by a prolonged housing market slide, subdued household confidence, and a fiscal contraction recorded through the first seven months of 2026. Emerging market GDP growth averaged 5.2 per cent year on year in the second quarter, the agency noted. The primary risk across the region, it warned, is that 'external or policy shocks could trigger a sharp slowdown, which would then be worsened by a fall in confidence.'

India's revised trajectory — now among the highest in the Asia-Pacific basket — will be closely watched in the coming quarters as the second-half growth test approaches.