Moody's raises India's GDP growth forecast to 7 per cent despite energy crisis

The world has been grappling with an energy crisis since the start of this year, and crude oil prices have risen sharply. Even so, India's economy appears to be moving ahead steadily. According to the latest report from international rating agency Moody's, its estimate of India's GDP growth has been raised to 7 per cent.

Earlier, the same agency had projected India's growth rate for the current financial year 2026-27 at 6.5 per cent.

Moody's said domestic demand is strong. An improvement in investment and better business conditions are helping the economy move forward. The agency is confident that India can continue to sustain economic growth of around 7 per cent. It has given the rating on this basis.

The report said the war between Iran and the United States has affected oil and gas supplies in many countries, pushing up energy prices. India buys a large part of its crude oil requirement from other countries, so costlier oil could have hit the Indian economy. According to Moody's, India has handled this challenge well.

India has increased the number of countries it depends on for buying crude oil and gas. Measures such as the role of state-run oil companies and tax relief helped reduce the immediate impact of higher fuel prices on ordinary people. The country's large refining capacity also contributed.

According to Moody's, investment indicators in the country are improving. Production and imports of machinery and industrial equipment are rising. Bank credit to industry has also increased. These signs raise hopes that private companies may invest more in factories, machinery and new businesses. This is likely to increase production and employment opportunities.

However, Moody's has also raised some concerns. Rising inflation could reduce people's purchasing power. A weak monsoon and El Nino conditions could affect agriculture and rural demand. In addition, a rise in Reserve Bank of India interest rates could make borrowing costlier for companies, raising the concern that the pace of new investment may slow.