India’s economic expansion is projected to slow sharply in the year to March 2027 and to recover only slightly the following year, according to a poll of economists conducted between July 21 and 27 that surveyed 42 participants. The median forecast from the poll puts gross domestic product growth at 6.6% for the fiscal year ending March 2027, down from 7.7% recorded in FY2025/26, and rising modestly to 6.8% in FY2027/28.
Respondents pointed to two central headwinds: weak private investment and higher global crude prices driven by the U.S.-Israeli war on Iran. Both forces are acting to restrain domestic demand, complicate inflation dynamics and reduce the incentive for firms to expand capacity.
Several economists in the poll noted that India’s growth continues to lean heavily on government spending, and raised questions about whether official headline figures fully capture the underlying strength of the economy. Kunal Kundu, an India economist at Societe Generale, cautioned that the headline number may be overstating activity: "We believe the headline print likely overstates the true pace of underlying activity," he said. He added that while investment and inventory accumulation had supported growth, "measurement distortions...have likely flattered the real growth outcome, leaving the headline print stronger than the underlying macro reality."
Official quarterly data showed private investment expanded at an annualised pace of 10.8% in the January-March period, the fastest since the national statistics series was revised. Still, the poll highlighted persistent doubts that private capex can mount a sustained recovery. Economists said many companies remain reluctant to commit to large capital expenditure projects given uncertainty over the durability of domestic demand, even where corporate balance sheets appear strong.
The limited appetite for fresh capacity expansion carries broader labour-market implications. Analysts pointed out that without stronger private investment, job creation may fail to keep pace with the millions entering India’s labour force each year, adding a structural risk to the recovery of consumption and incomes.
Higher oil prices are an additional strain. India imports roughly 90% of its crude oil needs, making it vulnerable to sustained energy-price increases that can lift fuel and transport costs, feed through to consumer prices, and complicate the central bank’s trade-off between growth and inflation.
In this environment, the Reserve Bank of India is widely expected to hold interest rates at its August policy meeting while assessing the inflationary impact of the energy shock. Analysts at Bank of America said they saw no prospect of a dovish shift in August: "We do not see risks of the central bank sounding dovish in August," they said. "We see a hold and messaging to emphasise risks on inflation management over the medium term, while waiting for clarity on growth in the near term."
Poll respondents also noted that the impact of higher oil prices and weak domestic demand is not unique to India. Similar concerns emerged in polls covering several Asian economies, where energy-cost pressures and soft demand are weighing on near-term growth prospects for China, Thailand, Indonesia and the Philippines.
Within India, economists highlighted the particular vulnerability of export-oriented sectors and firms that rely on clear demand visibility to justify large capital investments. As Morgan Stanley’s chief India economist Upasana Chachra put it: "A weaker global growth backdrop, slower trade expansion, or softer domestic consumption and investment demand could...weaken the incentive for firms to undertake fresh capacity expansion. Export-oriented sectors could also be particularly exposed." She added that "even where policy support is in place, firms may defer large capex decisions if demand visibility weakens."
Overall, the poll points to a near-term slowdown in headline growth with only a modest rebound expected, driven by the interplay of private investment hesitancy and an external oil-price shock that raises costs and complicates monetary policy choices.