India to lead G20 growth as Moody’s projects 6.4 percent GDP expansion next fiscal year

10 February, 2026
India to lead G20 growth as Moody’s projects 6.4 percent GDP expansion next fiscal year

India to lead G20 growth as Moody’s projects 6.4 percent GDP expansion next fiscal year

Winning Bizness Desk

Mumbai. India is set to remain the fastest growing major economy among G20 nations, according to the latest forecast by global rating agency Moody’s. In its fresh assessment released on Monday, Moody’s said India’s gross domestic product is expected to grow at 6.4 percent in the next financial year, 2026–27. The agency attributed this momentum to strong domestic consumption, supportive government policies and a stable banking system, even as global economic uncertainties continue to persist.

Why India tops the G20 growth chart Moody’s noted that India’s projected growth rate will be the highest among all G20 economies. The agency said domestic demand continues to act as the main growth engine, supported by policy continuity and financial sector resilience. It highlighted that India’s banking system remains well-capitalised and capable of supporting credit expansion, which is crucial for sustaining economic activity. Moody’s also pointed out that despite global headwinds, India’s macroeconomic fundamentals remain relatively strong.

Below government and RBI expectations While upbeat, Moody’s projection is lower than estimates made by Indian authorities. The Economic Survey tabled in Parliament last month projected growth between 6.8 percent and 7.4 percent for the financial year 2026–27. The Reserve Bank of India has also expressed a more optimistic outlook, indicating around 7 percent growth for the first half of the same fiscal year. The central bank had revised its GDP forecast upward on February 6, citing improving economic indicators.

Tax changes and banking outlook support demand Moody’s said recent policy changes will further support consumption and credit growth. According to the agency, amendments in Goods and Services Tax rules implemented in September 2025 and an increase in personal income tax exemption limits will leave more disposable income with households, boosting market demand.

Key banking sector indicators highlighted by Moody’s include:

  • Loan demand is expected to remain strong, with credit growth estimated at 11 to 13 percent in 2026–27
  • Non-performing loan levels are likely to stay between 2 and 2.5 percent, considered a safe range
  • Some stress may emerge in the MSME segment, but banks have adequate capital buffers to absorb potential losses
  • Trade deal boost and export prospects The report also referred to the trade agreement signed between India and the United States in February 2026. Moody’s believes the deal will improve the outlook for export-oriented companies, leading to better cash flows and investment activity. This is expected to ease pressure on small and medium enterprises and create new opportunities across sectors linked to global trade.
  • Interest rates, inflation and GDP basics Moody’s said inflation is now largely under control, giving the Reserve Bank of India room to continue with interest rate cuts if needed. However, the agency cautioned that future decisions will depend on signs of any economic slowdown. In 2025, the RBI had already reduced interest rates by 1.25 percent, bringing the repo rate to 5.25 percent.

    • To understand GDP simply:

  • GDP measures the total value of goods and services produced within a country over a specific period
  • It includes production by foreign companies operating within India
  • There are two types of GDP: real GDP, calculated at constant prices using a base year of 2011–12, and nominal GDP, calculated at current prices
  • GDP is calculated using the formula C+G+I+NX, covering consumption, government spending, investment and net exports

    • India’s growth continues to be driven mainly by household spending, private sector expansion and government expenditure, while higher imports keep net exports a drag on overall GDP.