OECD Raises India’s FY27 Growth Forecast to 7.1%
Stronger-than-expected economic momentum and resilient domestic demand prompt an 80-basis-point upgrade
Economic Outlook | India’s Growth Trajectory
The Organisation for Economic Co-operation and Development (OECD) has sharply raised its growth forecast for India for FY 2026–27 to 7.1%, up from its earlier estimate of 6.3% released in June. The 80-basis-point upward revision comes as India’s economy shows stronger-than-expected momentum despite global economic and geopolitical challenges.
Domestic Demand Provides Key Support
The OECD said resilient domestic demand and supportive government policies have helped India absorb external shocks, including higher energy costs and disruptions linked to the West Asia conflict. Strong consumption, investment activity and economic resilience have contributed to the improved growth outlook.
7.8% Growth in FY26 Sets Strong Base
India recorded 7.8% economic growth in FY 2025–26, providing a stronger base for the current fiscal year. The latest upgrade follows better-than-expected economic activity in the first quarter of FY27, with industrial activity, consumption and investment contributing to momentum.
Growth May Moderate in the Second Half
Despite the stronger full-year forecast, the OECD expects some moderation in economic activity during the second half of FY27. The organisation noted that reduced purchasing power could weigh on growth as higher prices affect household incomes, before a gradual recovery takes shape in 2027.
Inflation Forecast Revised to 4.7%
The OECD expects India’s headline inflation to average around 4.7% in FY27, slightly below its previous forecast. Inflation is projected to ease further to about 4.2% in FY28, although energy prices and global supply disruptions remain important risks to the outlook.
FY28 Growth Seen at 6.5%
Looking beyond FY27, the OECD projects India’s growth to moderate to 6.5% in FY 2027–28. The organisation expects the economy to maintain relatively strong expansion while facing pressures from global energy prices, trade uncertainties and weaker purchasing power.
India’s Growth Outlook Gains Global Upgrades
The OECD’s revision comes amid a broader wave of upward revisions by international institutions. S&P Global and the Asian Development Bank have raised their FY27 forecasts to 7%, while Fitch Ratings has revised its estimate to 6.9%. Moody’s Ratings also recently raised its forecast to 7%.
Global Risks Remain in Focus
Despite the positive outlook, risks remain. Higher energy prices, geopolitical tensions, trade-policy changes and inflationary pressures could affect India’s growth momentum. The OECD expects global growth at 2.9% in 2026 and 3% in 2027, with commodity prices and weaker real incomes likely to constrain activity in the near term.
