India's GDP growth prediction for 2026 was cut by Moody's Ratings on Tuesday by 0.8 percentage points to 6% due to weak private consumption, capital formation, and industrial activity in the face of rising energy prices.
Moody's stated in its Global Macro Outlook May update that, because to variations in exposure and resilience, the effects of rising energy costs and shortages of fuel and fertiliser over the next six months will fluctuate significantly between nations.
""We estimate growth losses ranging from around 0.8 ppt for India," Moody's stated. "The global outlook remains highly uncertain amid an increasingly prolonged confrontation and fragile ceasefire between the US and Iran."

Moody's cut India's GDP growth projections for the year 2027 by 0.5 percentage points to 6%, citing persistent challenges that eventually go away as shipping flows stabilise and energy supplies improve, enabling underlying economic activity to rebound.
According to Moody's, India is "particularly vulnerable" to rising oil costs because of its significant reliance on imported LNG and petroleum. About 90% of India's energy needs are met by imports.
Agricultural exports will profit in the short term from higher prices as a net grain producer, but higher fuel and fertiliser costs would put a pressure on government finances and may limit planned capital spending, according to Moody's.About 70% of India's electricity is produced using coal, although non-fossil energy sources including solar, wind, and hydropower are still growing.
"Our central scenario projection of 6 per cent growth in both 2026 and 2027, following 7.5 per cent growth in 2025, reflects more subdued private consumption, capital formation, and industrial activity amid tighter financial conditions and higher energy costs," Moody's stated.
It further stated that while major central banks remain on hold but are prepared to tighten financial conditions if needed, persistently high energy costs will keep inflation high, compress earnings, undermine investment, and pressure public finances.According to the US-based rating agency, the truce's longevity is threatened by protracted talks between the US and Iran, continuous shipping restrictions, and the possibility of military escalation.
In light of this unpredictable environment, the world economy may see another energy and food price shock, especially if transit flows to and from the Gulf continue to be restricted, according to Moody's. The extent of the growth and inflation effects also depends on how long the Strait of Hormuz remains closed.
60% of the LPG used in India is imported, and 90% of it passes through the now-closed Strait of Hormuz. By increasing oil imports from current partners and investigating new sources, a number of Asian economies are aggressively diversifying their supplier mix.

According to Moody's, Japan and Korea are gradually moving toward US barrels, while India is purchasing more Russian crude.
Additionally, it stated that the fallout presents a variety of common and unique issues for economies. Within months, physical global energy shortages will become more pressing, thus strategic reserves only provide temporary protection. The most vulnerable area is Asia-Pacific.India is still at risk, but China is somewhat protected by its reliance on coal and renewable energy, according to Moody's.