Our Bureau
Mumbai
Global ratings agency Moody’s Ratings has slashed India’s GDP growth forecast for 2026 to 6% from 6.8% earlier. The cut comes due to the ongoing war in West Asia, which is driving up energy costs and hurting economic momentum. For 2027, the GDP growth has been slashed by 0.5% to 6%
The agency released its credit opinion report on India this week. It warns that prolonged disruptions in the region will raise inflation risks. West Asia supplies around 55% of India’s crude oil imports and over 90% of its liquified petroleum gas (LPG) shipments. This conflict is causing higher fuel and transport costs, plus shortages for households.
Moody’s says weaker private consumption will slow growth. India relies on imported fertilizers from the region, leading to food inflation spillovers. Rising energy prices will widen the trade deficit and pressure government finances through higher subsidies for fuel and fertilizers. Remittances from overseas Indian workers in Gulf countries may also drop.
This forecast highlights India’s vulnerability to global energy shocks. As the West Asia war continues, policymakers face challenges in controlling inflation and supporting consumption. Moody’s urges quick action to ease supply chain issues and protect growth.
