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Informist, Monday, Aug. 17, 2026

NEW DELHI – Fitch group company BMI sees India's GDP for Apr-Jun growing at a slower pace than the March quarter with the fading effect of goods and services tax reform. However, economists at BMI assume the growth could be even stronger as seen in the past few quarters. "Our GDP tracker points to a stronger-than-expected start to FY2026/27 (Apr–Mar), suggesting GDP rose by around 7.3-7.4% y-o-y (year-on-year) in Q2 2026 (Apr-Jun), only slightly slower than the 7.8% recorded in Q1," they said.

Economists at BMI expect the country's growth to ease to 6.5% in 2027-28 (Apr-Mar) from 6.6% in FY27 with private consumption outweighing relief from lower crude oil prices. "The GST reform boost will continue to fade just as inflation is likely to accelerate, weighing on private consumption (around 60% of GDP) in the rest of FY2026/27," they said in a report. India's economy expanded 7.8% in the March quarter and 7.7% in FY26.

Further, "a Super El Nino food-price spike will be the principal drag, though cheaper energy should cushion the blow to household incomes," the report said. The latest projection for FY28 has risks tilted to the downside, with a more intense El Nino or renewed US-Iran war escalation the main threats to the BMI's view.

The Fitch group company's growth forecast is 30-40 bps higher than the Reserve Bank of India's latest projection of 7%. Earlier this month, State Bank of India projected India's growth at 8% in the June quarter.

India is likely to see CPI inflation to average higher at 6.2% in FY28, compared with 5.4% in FY27, assuming a Super El Nino event will drive food prices higher, the economists said in the report.

Amid the ongoing negotiations between the US and Iran, BMI estimates Brent crude oil to average $71 per barrel in 2027, lower than $86 per barrel in 2026. Lower crude oil prices will feed directly into softer fuel and transport costs, supporting higher real incomes even as food prices climb, the report said. India imports roughly 90% of oil. The war in West Asia led to a spike in crude oil prices to as high as $122.5 per barrel in April, before it moderated to $88.22 per barrel currently.

On the policy side, BMI now foresees the Reserve Bank of India's Monetary Policy Committee to raise the repo rate by 50 bps by FY28, instead of FY27. "The second of two 25 bps rate rises, which we now expect in FY2027/28 instead, will further constrain household demand. The lift from the 2025 GST reforms will be largely spent by end-FY2026/27," the report said.  End

US$1 = INR 96.61

Reported by Shweta

Edited by Akul Nishant Akhoury

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