Moody's Forecasts 7.3% GDP Growth for India in FY 2025-26, Insurance Demand to Rise

Rating agency Moody's has projected India’s economic growth at 7.3% for the current fiscal year, supporting average domestic income and increasing insurance demand. In its report on the Indian insurance sector, Moody's noted that the industry is likely to benefit from continuous premium growth, driven by strong economic expansion, increased digitization, tax reforms, and proposed reforms in major government-owned insurance companies.

The agency stated that this growth could improve the currently weak profitability of the sector. "We expect India’s economy to grow at 7.3% in FY 2025-26, up from 6.5% in the previous fiscal year, supporting higher average income and boosting insurance demand," Moody's said.

In FY 2024-25, per capita GDP grew 8.2% year-on-year to $11,176, while total GDP growth was 6.5%. According to Moody's, strong economic growth in India contributed to a 17% increase in total insurance premium income to ₹10.9 lakh crore during the first eight months (April–November) of FY 2025-26. Health insurance premiums rose by 14%, and new business premiums for life insurance increased by 20%.

This growth is faster than FY 2024-25, when total premiums rose by 7% to ₹11.9 lakh crore. Moody's highlighted that the increase in premiums reflects rising risk awareness among Indian consumers and the continuing digitization of the economy. Digitization makes insurance product distribution and sales easier and more accessible, aligning with the Insurance Regulator’s goal of "insurance for all by 2047."