India Growth Seen Slowing To 6.6 Pc In FY27, Says Fitch Group Company BMI

Fitch Group company BMI on Tuesday projected India's growth to slow to 6.6% 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% 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 Middle East 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%.

"We expect growth to moderate from 7.7% in FY2025/26 (April-March) to 6.6% 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% and 18%.

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% 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 $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.