India to clock fastest growth among G-20 economies: Moody's
What's the story
India's economy is expected to witness robust growth, with Moody's projecting a real GDP growth rate of 6.4% for the fiscal year 2026-27. This would be the fastest pace among all G-20 nations. The growth is expected to be driven by strong domestic demand and investment, along with stable financial conditions and credit demand across sectors.
Economic resilience
Financial stability and credit demand to drive growth
The sustained momentum in India's output is expected to provide a solid macroeconomic foundation. This will support overall financial stability and credit demand across sectors, Moody's said. The rating agency expects the strength of the economy to keep financial conditions broadly steady over the next 12-18 months. It also anticipates stable asset quality indicators and continued resilience in corporate balance sheets during this period.
Financial forecasts
Retail credit trends to vary based on underwriting standards
Moody's estimates that credit expansion will continue in line with economic activity, supported by stable profitability metrics across the system. The agency also anticipates improved liquidity conditions, with deposit growth broadly keeping pace with loan demand. Despite the positive overall GDP outlook, some vulnerabilities remain in certain sectors. Retail credit trends are expected to remain stable, particularly among prime borrowers, though performance could vary depending on lenders' underwriting standards and customer profiles.
Sectoral impact
MSME operating conditions expected to improve gradually
The operating conditions for micro, small and medium enterprises (MSMEs), especially those linked to exports, are likely to gradually improve. This is due to a trade agreement reached between India and the US in February 2026. The deal is expected to reduce the risk of further stress in that segment. However, competition for deposits could intensify, posing challenges for banks seeking low-cost funding sources.