NEW DELHI, Feb 9: Moody’s Ratings on Monday projected India’s real GDP to grow at 6.4 per cent in fiscal year 2026-27, the fastest among G-20 economies, supported by strong domestic consumption, policy measures, and a stable banking system.
Moody’s said Indian banks’ asset quality will remain resilient, although some stress may persist among micro, small, and medium enterprises (MSMEs).
In its banking system outlook report, it added that banks have sufficient reserves to absorb potential loan losses.
The ratings agency said the operating environment for banks will remain strong in 2026, backed by robust macroeconomic conditions and ongoing structural reforms.
“We forecast India’s real GDP will grow 6.4 per cent for fiscal 2026-27, the fastest pace among G-20 economies, driven by strong domestic consumption and policy measures,” Moody’s said.
It noted that the rationalisation of the goods and services tax (GST) in September 2025, along with an earlier increase in personal income tax thresholds, will improve affordability for consumers and support consumption-led growth.
Moody’s FY27 growth projection is lower than the 6.8-7.2 per cent range estimated by the Finance Ministry in the Economic Survey tabled in Parliament last month.
According to official estimates, India is expected to grow by 7.4 per cent in the current fiscal year (2025-26), compared with 6.5 per cent growth in 2024-25.
On monetary policy, Moody’s said that with inflation under control and growth momentum remaining strong, the Reserve Bank of India (RBI) is likely to ease policy further in fiscal 2026-27 only if there are clear signs of an economic slowdown.
The agency expects system-wide loan growth to accelerate slightly to around 11-13 per cent in fiscal 2026-27, compared with 10.6 per cent growth recorded so far in fiscal 2025-26.
“Corporate loan quality will remain healthy, supported by strong balance sheets and improved profitability among large companies,” Moody’s said, adding that recoveries are likely to taper as banks have already resolved most stressed loans of large corporates.
Moody’s also said banks will maintain strong capitalisation, supported by internal capital generation keeping pace with asset growth. Banks’ funding and liquidity positions are expected to remain stable, with loan growth broadly aligned with deposit growth.
“We continue to expect the government to provide strong support for banks in times of need,” the report added. (UNI)
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