India’s Economic Growth Seen Moderating To 6.6% In FY27

India’s gross domestic product (GDP) growth is projected to ease to 6.6% in FY27 from 7.7% in FY26, BMI, a Fitch Solutions company, said in its latest assessment, citing softer consumption trends, slower investment activity and disruptions linked to the ongoing West Asia conflict.

The forecast follows official data showing that India’s economy grew 7.7% in FY26, up from 7.1% in FY25. The expansion was supported by strong domestic demand and continued capital expenditure during the year.

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BMI said its FY27 estimate remains above India’s average annual growth rate of 6.1% recorded over the past decade. The projection is also aligned with the Reserve Bank of India’s growth forecast of 6.6% for the current fiscal year.

Consumption Momentum Expected To Moderate

According to the report, the boost from GST reforms introduced in September 2025 is likely to fade during FY27. Those changes contributed to a sharp rise in consumption during the December quarter of FY26. However, consumer spending growth slowed in the March quarter, with year-on-year growth easing by 1.1 percentage points to 7.1%.

BMI noted that inflationary pressures could further affect household spending. It expects inflation to average 5.3% in FY27, partly due to supply-side risks arising from disruptions around the Strait of Hormuz, a key global energy shipping route.

The report said higher prices could reduce purchasing power and weigh on discretionary consumption over the coming quarters.

Investment Growth May Lose Pace

BMI also expects investment activity to expand at a slower rate than in FY26. The report attributed this to evolving economic conditions rather than immediate monetary tightening.

While BMI has forecast cumulative RBI rate increases of 50 basis points during FY27, it said the full impact of any tightening cycle would likely be felt more significantly in FY28.

At the same time, the report highlighted that the economy continues to benefit from the RBI’s cumulative 125 basis points of rate cuts implemented during 2025. Lower borrowing costs are expected to provide support amid ongoing energy-related challenges.

Rupee Outlook And External Risks

BMI expects the Indian rupee to average around 95.1 against the U.S. dollar during the calendar year. The report said a weaker rupee compared with its average level of 87 in 2025 could improve export competitiveness and partially offset the economic impact of higher import costs arising from geopolitical tensions.

The report identified trade disruptions and elevated energy prices linked to developments in West Asia as key external risks for the Indian economy. Despite these challenges, India is expected to remain one of the faster-growing major economies, supported by domestic demand, policy support and continued investment activity.