Our Bureau
Mumbai
India’s economic growth is expected to moderate to 6.6% in FY2026-27, down from 7.7% in FY2025-26, as the impact of the recent GST-led boost to economic activity begins to fade, according to Fitch Group company BMI. The forecast points to a gradual moderation in growth momentum despite continued resilience in domestic demand.
BMI expects the economy to face a less supportive growth environment in the current financial year, with the temporary boost from GST changes likely to diminish. Elevated inflation and external risks could also weigh on consumption and investment, the report said.
The projection comes amid differing assessments of India’s growth prospects. The Reserve Bank of India recently raised its FY27 growth forecast to 6.7%, citing strong domestic economic performance and better-than-expected first-quarter conditions. The central bank, however, flagged risks from higher oil prices, geopolitical tensions and an uncertain monsoon.
Fitch Ratings has also maintained a positive assessment of India’s broader economic fundamentals. On Tuesday, it affirmed the country’s BBB- sovereign rating with a stable outlook, while projecting real GDP growth of 6.4% in FY27. Fitch cited strong growth, contained inflation and robust external buffers as key strengths, while highlighting concerns including high government debt and structural challenges such as low GDP per capita.
The moderation in growth is nevertheless expected to leave India among the world’s faster-growing major economies. Strong domestic consumption, services activity and infrastructure investment are likely to remain important drivers, although external shocks and inflationary pressures could influence the pace of expansion.
The differing forecasts underline the uncertainty surrounding India’s growth trajectory in FY27, with policymakers balancing continued expansion against global economic risks and domestic inflation pressures.