India’s GDP to grow at 6.6% in FY27 compared to 7.7% last fiscal: BMI

India’s Gross Domestic Product (GDP) is set to grow at 6.6 per cent in the current fiscal as compared to 7.7 per cent in FY26, said BMI, a Fitch group company, citing weaker investments and consumption growth and trade shocks from the West Asia crisis.

BMI expected the Indian rupee to trade in the range of 95.1 against the US dollar this calendar year and said the rupee’s depreciation from its average level of 87 in 2025 will support export competitiveness, offsetting the drag on GDP from the Iran conflict’s terms-of-trade shock.

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“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 has 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. Second, higher price inflation, which BMI expects to hit 5.3 per cent in FY27, will hinder consumption growth amid disruption at the Strait of Hormuz.

Third, BMI expects investment growth to slow during the 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,” it said.

Last week, the government also released data on GDP growth, saying the growth accelerated to 7.7 per cent in FY26 from 7.1 per cent in FY25, supported by healthy consumption and robust investment activity.

In its annual report for 2025-26, the RBI said that while the Indian banking system is expected to remain resilient, lingering geopolitical tensions and supply chain disruptions may pose near-term risks to corporate earnings and the performance of loan portfolios.

The West Asia conflict and the attendant risks of elevated energy prices, supply chain disruptions, financial market volatility, uncertainty surrounding global trade policies and weather-related disruptions could pose headwinds to growth and inflation in the short run, it added.

However, the report highlighted that healthy corporate and bank balance sheets, the government’s continued thrust on capital expenditure, and the implementation of trade agreements with key partners are expected to sustain investment and growth momentum.