India’s growth is set to decelerate to 6.7 per cent in the current fiscal, from 7.7 per cent in 2025-26, according to BMI, a Fitch Group firm. It said the GDP expansion is likely to slow significantly due to waning momentum and oil price shock from Iran war.
BMI estimates that India’s economy grew 8 per cent y-o-y in the January-March quarter of 2026, faster than its original 7.8 per cent projection. It has revised its growth forecast for 2025-26 upwards by 0.1 per cent to 7.7 per cent.
The report further said that the prospect of the Iran-US conflict escalating in scope presents downside risk to its growth outlook and India must balance spending needs on defence and fuel price stabilisation against fiscal consolidation agenda.
The tax reforms in GST and income tax carried out in 2025 will partly offset effects of cost-push inflation, BMI said, adding looser monetary policy will support capital spending, as increased uncertainty amid the war and higher input prices hurt investment, it added.
BMI said one factor behind the unchanged FY27 forecast is its assessment that the effects of last year’s tax reforms will dissipate by April-June quarter of 2026. “We maintain our forecast of 6.7 per cent GDP growth during FY2026-27 due to our belief that the effects of last year’s tax reforms will fade as input costs increase in the new fiscal year,” BMI said, adding GDP growth could “slow significantly.”
While electricity generation grew 2.7 per cent y-o-y last quarter, the growth was driven by power demand in January-February. During March, electricity consumption rose by a mere 0.9 per cent y-o-y.
The report mentioned that the conflict in Iran has already curtailed supplies and that has already been factored in the 6.7 per cent growth estimate for FY27.
Recently, a United Nations (UN) report has said that India became the top remittance recipient country in the world and the only nation to surpass 100 billion dollars, the UN agency on migration said, adding that the country received over 137 billion dollars in remittances in 2024.
“India consistently leads as the top recipient of remittances, followed by Mexico,” the World Migration Report 2026, released by the International Organization for Migration (IOM) said.