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India’s growth to slow down to 6.6% in FY27 amid high inflation: BMI

11 Aug 2026 Evaluate

Fitch Group company BMI, in its report on Asia-Pacific, has projected that India’s growth to slow to 6.6 per cent in the current fiscal year 2026-27 (FY27), from 7.7 per cent in FY 2025-26 (April-March), as the boost to the economy from last year’s GST reforms wanes and inflation remains elevated, averaging 5.4 per cent. As part of the GST reforms rolled out in September 2026, tax rates on 375 items were cut, and the GST structure was rationalised from a four-tier structure to virtually two slabs - 5 per cent and 18 per cent.

It noted that India remains the Asia-Pacific’s fastest-growing large economy, but the risks lie to the downside, mainly from a re-escalation in West Asia or a weaker monsoon. It said the key risk to growth in the Asia-Pacific region remains an escalation of the US-Iran conflict, which could push oil prices higher and weigh on real incomes and private consumption. It said “We expect steady Asia-Pacific growth at 4.1 per cent in 2027, even as its fastest engine cools.”

BMI said its forecast assumes that a preliminary deal between the US and Iran will be implemented within the quarter. It said any slippage beyond that would raise oil prices above its baseline of $86 per barrel on average for 2026 and prompt another round of growth forecast revisions. It added, “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 more adverse oil price and regional growth outcomes.”

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