Monsoon Deficit and Global Energy Stress To Slow India’s Growth to 6.6%, Says S&P

New Delhi: Energy stress, below-average monsoon and slowing global growth will push India’s gross domestic product (GDP) growth to 6.6 per cent in the current fiscal, global ratings giant S&P Global Ratings said on Wednesday. The Indian economy recorded a growth of 7.7 percent in fiscal 2025-26 and 7.1 percent in fiscal 2024-25.

“In an environment of energy stress, below-average monsoon prospects and slowing global growth, we forecast real GDP growth to slow to 6.6 per cent in the fiscal year ending March 2027, compared to 7.7 per cent in fiscal 2026,” S&P said in its latest report.

S&P’s FY27 growth forecast is in line with the RBI’s estimate of 6.6 per cent. The impact of El Niño weakened the monsoon rains and the rainfall deficit increased to 43 percent by June 22. To deal with the deficient monsoon, the government has prepared state-wise contingency plans that suggest alternative crops suitable for inadequate rainfall conditions.

India imports 88 percent of its crude oil needs and the rise in global prices increases the import bill and increases inflation. “The region’s outlook is shaped by resilient global activity, energy market stress and an AI-driven technology export boom. The impact of energy stress from the West Asian conflict can be seen as the industry faces a significant increase in input costs and suppliers’ delivery times. Additionally, high fertilizer prices are putting pressure on food production and driving up food prices,” S&P said.

S&P also said rising inflation erodes purchasing power, thus suppressing growth. “Higher fertilizer prices may put pressure on food production and fuel prices. Consumer inflation will be 0.5-0.6 percentage points higher in India in the third quarter, rising to 5.1 percent in the current fiscal as manufacturers pass on higher energy costs to consumers, along with recent increases in gasoline, diesel and cooking gas prices,” the report said.