Economy: Amid global headwinds, India’s GDP growth to slow to 6.6% in FY27, says BMI
Virendra Pandit
New Delhi: Amid the ongoing West Asian conflict between the US-Israel, and Iran, and the global headwinds, India’s GDP growth in the current final year, 2026-27, would slow down to 6.6 per cent, as compared to 7.7 per cent in FY26, according to BMI, a Fitch Group company.
This projection is in line with the Reserve Bank of India (RBI)’s 6.6 per cent growth estimates for FY27, the media reported on Thursday.
BMI is a British multinational research firm and subsidiary of Fitch Solutions that provides macroeconomic, industry and financial market analysis, covering 22 industries and 200 global markets. It was founded in 1984 as Business Monitor International and in 2014 was acquired by Fitch Group.
BMI’s projection is based also on weaker investments and consumption growth and trade shocks from the West Asia crisis.
According to government data released last week, GDP growth in FY26 accelerated to 7.7 per cent from 7.1 per cent in FY25, supported by healthy consumption and robust investment activity.
BMI expects the Indian rupee to trade in the range of 95.1 against the US dollar this calendar year. It said the rupee’s depreciation from its 87 average level in 2025 will support export competitiveness, offsetting the drag on GDP from the Iran conflict’s terms-of-trade shock.
The GST reforms implemented in September 2025 caused a consumption boom in the October-December quarter of FY26. Thereafter, consumption growth fell by 1.1 percentage points to 7.1 per cent y-o-y in the January-March quarter of FY26.
“Looking ahead, we continue to expect 6.6 per cent GDP growth in FY2026/27. Our projection represents a visible slowdown from FY2025-26’s 7.7 per cent pace but exceeds India’s average 6.1 per cent per annum growth rate over the last decade,” it said.
BMI attributed the slow growth rate this fiscal to three factors. First, the impact of last year’s GST reforms on domestic consumption is likely to wane. Also, higher price inflation which BMI expects to hit 5.3 per cent in FY27 will hinder consumption growth amid ongoing disruption at Strait of Hormuz.
Thirdly, BMI expects investment growth to slow during the current fiscal year. “This slowdown is not due to our new forecast of accumulative 50 basis points (bps) rate hike by the RBI in FY2026/27, since the effect on growth will primarily be felt during FY2027/28.”
BMI said the currently low level of short-term interest rates following the RBI’s 125 bps rate cut during 2025 will support the economy through the ongoing energy crisis.
