New Delhi, June 11 (IANS) India’s GDP growth is pegged at 6.6 per cent for the financial year 2026-27, which is above the country’s decadal growth average, and will enable the country to retain its tag as the world’s fastest-growing economy amid the adverse impact triggered by the West Asia crisis, according to a forecast by Fitch Group company BMI.

BMI’s projection is in line with RBI’s 6.6 per cent growth estimates for 2026-27. India clocked a robust growth rate of 7.7 per cent in 2025-26 despite the global challenges.

“Looking ahead, we continue to expect 6.6 per cent GDP growth in FY 2026-27. Our projection represents a visible slowdown from FY2025-26’s 7.7 per cent pace but exceeds India’s average 6.1 per cent per annum growth rate over the last decade,” it said

BMI attributed the slow growth rate this fiscal to three factors. First, the impact of last year’s GST reforms on domestic consumption is likely to wane. The GST reforms implemented in September 2025 caused a consumption boom in the December quarter of FY26. Thereafter, consumption growth fell by 1.1 percentage points to 7.1 per cent year-on-year in the March quarter of FY26.

The report also expects higher inflation, which is expected to touch 5.3 per cent in FY27, to dampen consumption growth amid supply chain disruptions due to the choking of the Strait of Hormuz through which 20 per cent of the world’s energy exports transit during normal times.

Thirdly, BMI expects investment growth to slow during the financial year. “This slowdown is not due to our new forecast of an accumulative 50 basis points (bps) rate hike by the RBI in FY 2026-27, since the effect on growth will primarily be felt during FY2027-28.”

BMI said the currently low level of short-term interest rates following the RBI’s 125 bps rate cut during 2025 will support the economy through the ongoing energy crisis.

The exchange rate of the rupee vis-a-vis the US dollar is expected to hover in the range of 95.1 during the current calendar year. The rupee’s depreciation from its average level of 87 against the greenback in 2025 will support export competitiveness, offsetting the drag on GDP from the Iran conflict’s terms-of-trade shock, the report added.

–IANS

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