S&P Cuts India’s FY27 Growth Forecast To 6.6% On Energy Stress, Weak Monsoon

India’s economic growth is likely to slow down somewhat in the coming financial year, according to S&P Global Ratings. In its latest Asia-Pacific report, the agency said the country’s GDP growth, which came in at 7.7% in 2025-26, could ease to 6.6% in 2026-27. S&P attributed the slowdown to a combination of factors: rising international oil prices, below-normal rainfall, and a broader slowdown in global economic growth.

Monsoon Worries Add To The Pressure
The monsoon has weakened under the influence of El Nino, and the rainfall deficit had widened to 43% as of June 22, a figure the report flags as a real concern. S&P warned that rising fuel prices, combined with higher fertilizer costs and pressure on agricultural output, could push inflation back up. The agency projects inflation could reach 5.1% in the current financial year.

How This Could Hit Growth
Higher inflation typically erodes purchasing power and slows down consumption. S&P explained that this dynamic could put pressure on domestic demand, which would in turn weigh on overall economic growth.

West Asia Tensions Add Another Layer
The agency also pointed out that tensions in West Asia are already affecting energy markets, and that the impact is likely to become more visible in import-dependent economies like India’s.