Fitch Group company BMI on Tuesday projected India’s growth to slow to 6.6 per cent in the current fiscal as the boost to the economy from last year’s GST reforms wanes and elevated inflation erodes household income.
The Indian economy grew 7.7 per cent in financial year 2025-26.
India remains Asia-Pacific’s fastest-growing large economy, but the risks lie to the downside, mainly from a re-escalation in the West Asia or a weaker monsoon, BMI said.
It said India’s growth will slow in FY27 as the fiscal boost from GST reforms fades and inflation remains elevated, averaging 5.4 per cent.
“We expect growth to moderate from 7.7 per cent in FY2025/26 (April-March) to 6.6 per cent in FY2026/27, as the lift from last year’s Goods and Services Tax reforms wears off while elevated inflation erodes household incomes,” BMI said.
As part of the GST reforms rolled out in September last year, tax rates on 375 items were cut and GST was rationalised from a 4-tier structure to virtually 2 slabs — 5 per cent and 18 per cent.
BMI, in its report on Asia-Pacific, said the key risk to the region’s growth remains the US-Iran conflict escalation would push oil prices higher and weigh on real incomes and private consumption.
“We expect steady APAC growth at 4.1 per cent in 2027, even as its fastest engine cools,” BMI said.
BMI said its forecast assumes a preliminary deal between the US and Iran being implemented within the quarter.
Any slippage beyond that would raise oil prices above our baseline of USD 86/bbl on average for 2026, and prompt another round of growth forecast revisions, it said.
“We are watching for signs of two-way tanker traffic picking up through the Strait of Hormuz. A ‘deal’ that leaves the Strait disrupted would still likely result in a more adverse oil price and regional growth outcomes,” BMI added.
