Moody's Ratings projects that India's robust growth momentum will continue at a steady pace of 6.5% through 2027. This sustained expansion is attributed to strong domestic demand, infrastructure investment, and diversified exports. The rating agency's assessment aligns with the country's current focus on high capital expenditure and growing private demand, although it notes that private investment remains somewhat cautious.

The consistent increase in consumer spending is reinforcing economic activity, establishing domestic demand as a key pillar. Government-led capital expenditure, particularly in transport, energy, and logistics, continues to act as a core enabler of medium-term growth. Robust public investments are also contributing to job creation, especially in construction and related industries, which is expected to positively impact per capita income and productivity.

Despite the overall positive outlook, private capital expenditure remains guarded amid global uncertainties and elevated interest rates. While sectors like retail, services, and digital have shown investment interest, broader corporate capital expenditure is yet to pick up sustainably.

India's macroeconomic stability, characterized by relatively low inflation and stable currency performance compared to its global peers, is also supporting the growth outlook. The Reserve Bank of India (RBI) is maintaining a balanced policy approach, which further strengthens the macroeconomic fundamentals and supports the projected GDP growth. Moody's expects a neutral-to-easy monetary policy stance amid low inflation to continue supporting the economy.

Indian exporters have demonstrated their ability to adapt to shifting trade dynamics, including US tariffs. For example, even with a drop in shipments to the US, overall exports climbed 6.75% in September. International capital flows, driven by positive international investor sentiment, have also helped buffer external shocks.

Moody's expects global GDP growth to hover between 2.5% and 2.6% in 2026 and 2027. In comparison, India stands out as a high-growth outlier, significantly outpacing both advanced and developing economies. While advanced economies are expected to grow around 1.5%, emerging markets are projected to expand near 4%. Specifically, Moody's anticipates Brazil and India to be the fastest-growing G-20 economies, with growth rates of 2.0% and 6.5% respectively through 2027.

However, Moody's has also cautioned that global trade realignments and geopolitical tensions could pose risks to India's growth momentum. The agency noted that geopolitical tensions, trade disruptions, and political instability are amplifying uncertainty. Diverging monetary policies and fragile bond markets could potentially exacerbate financial turbulence.