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Informist, Thursday, Jun. 11, 2026

 

NEW DELHI – Fitch group company BMI has lowered its forecast for India's GDP growth in 2026-27 (Apr-Mar) by 10 basis points at 6.6%, with downside risks to the projection arising from the energy price shock due to the West Asia war. Higher inflation and the fading boost from the goods and services tax cut announced last year are also seen pulling down growth this year from 7.7% in FY27, BMI said.

 

The Fitch group company in May had projected India's FY27 GDP growth at 6.7%. India's economy expanded 7.8% in the March quarter and 7.7% in FY26. The Reserve Bank of India Friday lowered India's FY27 growth forecast by 30 bps to 6.6%. The slew of measures announced by the government--from economic stabilisation fund to credit guarantee scheme--are expected to support the economy, BMI said.

 

BMI estimates around 20-bps fall for every 10% rise in Brent crude oil prices. "If the Iran conflict were to last longer than we expect, the region could see renewed attacks on GCC (Gulf Cooperation Council) countries and push up energy prices," BMI said in a report. Since the beginning of the war on Feb. 28, crude oil prices have risen around 22% to trade at $93.84 per barrel. Oil prices also hit a high of $122.53 per barrel on Apr. 29.

In response to the energy supply shock, BMI sees domestic oil importers shifting to Russian crude oil after the US again waived its sanctions on Russian oil in May. "We expect the waivers to continue," BMI said. The waiver in March resulted in Russia's share of India's oil imports climbing to an 11-month high of 38% in April, BMI added.

 

BMI expects the the RBI's Monetary Policy Committee to raise the repo rate by 50 bps in FY27 from the current 5.25%. While the effect of the projected rate hikes will reflect on growth in FY28, the currently "low level of short-term interest rates following the RBI's 125bps rate cut during 2025 will support the economy through the ongoing energy crisis," BMI said.

 

The Indian rupee is seen around 95.1 against the dollar for the rest of 2026, BMI said. "The rupee's depreciation from its INR87/USD average level in 2025 will support export competitiveness, offsetting the drag on GDP from the Iran conflict's terms-of trade shock," they said.  End

 

US$1 = INR 95.71

 

Reported by Shweta

Edited by Akul Nishant Akhoury

 

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