India's economic outlook remains bright, with BMI, a Fitch Solutions company, projecting a robust 7% growth for fiscal year 2027. This forecast signals continued strong economic performance following an anticipated 7.4% expansion in FY26.
Several factors underpin this positive outlook. According to BMI, supportive government policies designed to stimulate investment and consumer spending are significantly contributing to the country's economic momentum. Key reforms, including those related to the Goods and Services Tax (GST), personal income tax, and insurance ownership, are creating a more favorable economic environment.
The Reserve Bank of India's (RBI) monetary policy, particularly its rate cuts, are also expected to play a crucial role in supporting economic growth. Lower interest rates typically encourage borrowing and investment, further fueling economic expansion.
It's worth noting that BMI had previously revised its FY26 growth forecast upwards by 50 basis points to 6.5%. This revision, made in late November 2025, was attributed to strong economic data expected for the September quarter. At that time, BMI also increased its FY27 growth forecast by 30 basis points to 6.1%, citing positive changes in macroeconomic policies. The company projected economic growth at 6.9% for both FY28 and FY29.
BMI had observed that high-frequency data, such as industrial production and new vehicle registrations, presented a favorable picture of India's economy in the September quarter of 2025. The streamlining of the GST system in September was identified as a key driver of this uptick in performance. BMI noted that the GST reforms not only made many items cheaper but also improved the ease of doing business and reduced policy uncertainty.
While BMI's earlier projections acknowledged the potential impact of US tariffs on Indian exports implemented in August 2025, the current forecast of 7% for FY27 suggests a more optimistic outlook, potentially factoring in other mitigating factors such as increased government spending, a rise in consumption and investment, and fresh artificial intelligence-related investments.
