India’s Finance Ministry said the country entered the second quarter of FY27 from a position of strength, but warned in its September 2026 Monthly Economic Review that India “cannot afford to take its growth performance for granted” as global risks rise and investors stay cautious on the country, according to The Economic Times’ report on the review.
The review said India’s real GDP grew 7.8% in Q1 FY27, which it described as the highest first-quarter growth in the current series. Its nowcasting measure points to 7.3% growth in Q2, according to The Economic Times.
What the review flags
The review described investor interest in India as “not low but cautious” and said near-term uncertainties are casting a shadow on India as an investment destination. Those uncertainties include the state of the trade relationship with the United States, tariff pressures, uncertainty over crude oil prices and supply, and the absence of an India angle to global AI-related developments, per The Economic Times.
The policy argument in the report
The review said India needs to become “more competition-friendly rather than business-friendly,” adding that only a competitive economy will become a successful, innovative and manufacturing economy. It also said improved governance and stronger state capacity at all levels of government are key to that goal, according to The Economic Times’ account of the document.
One positive signal it highlighted
To support its argument that India’s fundamentals are strengthening, the review pointed to a sovereign rating upgrade from Japan Credit Rating Agency, which raised India to A- from BBB+ in September 2026, as reported by The Economic Times.
