Moody's said India's real GDP grew 8.2% year‑on‑year in the first half of 2026, a jump from 7.3% the year before. The rise in private consumption and robust infrastructure spending fed the surge.
The agency highlighted resilience to the Middle East conflict, noting that higher oil prices and an El Niño‑driven weather pattern could push inflation beyond its 4.8% forecast for fiscal 2026‑27.
Despite the optimistic growth outlook, Moody's warned that debt affordability will stay weak as India's debt burden climbs and interest costs remain high. It also flagged that a gradual debt reduction is likely, given the government's target of a 4.3% deficit of GDP for 2026‑27. The rating upgrade comes amid a broader backdrop of a modest fiscal easing – the central deficit is set to drop from 4.4% in 2025‑26 to 4.3% in 2026‑27.
Earlier this month, Japan’s JCR lifted India's sovereign rating to A‑ after 35 years, while S&P and Fitch reaffirmed its investment‑grade status. In the June quarter of FY27, India’s GDP grew 7.8%, surpassing the RBI’s 7% estimate.
A textile entrepreneur in Pune said the new outlook gives his business a clearer outlook, though rising input costs still loom. Moody's will present its revised rating at the next committee meeting in October.