BMI, a Fitch Solutions company, raised its growth forecast for India to 7.5 per cent for FY27 from 6.8 per cent estimated previously, with the second quarter (July-September) projected to grow at 8.3 per cent.
The agency cited sustained industrial growth for the uptick, even as it cautioned against elevated oil prices, expected policy rate increases over inflationary concerns and a strengthening El Niño, while downgrading growth projections for FY28 (April 2027-March 2028) to 6.3 per cent from 6.5 per cent.
“High-frequency indicators point to strong growth momentum, with our GDP tracker suggesting growth of around 8.3 per cent in Q2 FY2026/27 (July- September),” BMI said in its recent outlook for India.
The report cited industrial production growth accelerating from 6.2 per cent in Q1 (April-June) to 7.7 per cent in July-August, alongside vehicle registration growth increasing from 16 per cent in Q1 to 26 per cent in Q2 (July-September).
The upgrade to India’s growth forecast follows similar revisions by the Reserve Bank of India (RBI) and several global agencies after the economy posted better-than-expected growth of 7.8 per cent in the first quarter of the financial year (April-June). Recently, the RBI revised upwards its growth projection for FY27 to 7.1 per cent from 6.7 per cent. The World Bank also raised India's growth projection for the current financial year of 2026-27 to 7.1 per cent from 6.6 per cent estimated previously.
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On growth drivers, the report said planned artificial intelligence-related investment by Reliance, Adani, AWS and Microsoft, along with government efforts to expand power capacity for data centres under the 2025 SHANTI Act, would likely provide a durable boost to GDP, given the longer-term nature of these infrastructure investment commitments.
However, BMI said higher-for-longer energy prices would weigh on household consumption and raise the import bill owing to the persistent West Asian conflict. The agency raised its inflation forecast to 5.6 per cent from 5.3 per cent in FY27 and to 6.5 per cent from 6.2 per cent in FY28. It expects the RBI to raise the repo rate by another 75 basis points to 6.25 per cent, even after last week’s 25-basis-point increase.
BMI has increased its assumed average Brent crude oil price forecasts from $83 per barrel to $93 per barrel in 2026 and from $71 per barrel to $81 per barrel in 2027.
Moreover, the report forecasts the consumption boost from the GST reforms and front-loading of exports to the US to fade. “Though a weaker rupee could provide some support for exports, this is unlikely to offset the impact of elevated energy prices given price inelastic energy imports,” it said.
Along with elevated crude prices, a strengthening El Niño, already responsible for a rain-deficient monsoon in large parts of the country, is likely to add to inflationary pressure while hampering agricultural and rural incomes, according to the report.
While the Indian government has implemented fuel-tax relief and targeted support measures after energy price shocks, further expansion is deemed unlikely due to increasing revenue losses and limited fiscal room, the report said.