India's Economic Outlook Strengthens As BMI Lifts FY26 GDP Forecast To 7.4%

BMI, a Fitch Group company, on Monday forecast a 7.4% growth for the current fiscal and 7% for Fiscal 2027 saying a favourable policy environment bodes well for India's economic outlook.

It said that monetary and regulatory measures should stimulate investment and consumption over 2026-27 fiscal.

"A strong advanced estimate of the current fiscal year's GDP, rising US-bound merchandise exports during the past two months, and a favourable policy environment bodes well for India's economic outlook," BMI said in a report.

The National Statistics Office (NSO) has projected a 7.4% GDP expansion for Fiscal 2025/26 (April-March). This implies the government expects GDP will grow by around 7% Y-o-Y on average in the second half of the fiscal year.

The Indian economy grew at 6.5% in 2024-25 fiscal.

BMI revised upwards GDP forecast for 2025-26 to 7.4%, up from 7.2% projected earlier. It now expects GDP to rise by 7% in Fiscal 2026-27, up from 6.6% estimated previously.

"Foundation has already been laid for a strong October-December quarter," BMI said, adding that the economy would expand by more than 9% Y-o-Y in the third quarter (October-December) of fiscal 2025-26.

The Indian economy grew by a robust 7.8% in the first quarter (April-June), and 8.2% in the second quarter (July-September), as per official estimates.

BMI said the 2025 reforms to the goods and services tax and personal income tax systems have lowered the tax burden on households.

The Reserve Bank of India also cut its policy rate by a total of 125 basis points last year. Finally, the government has pushed to implement new labour codes and allow 100% foreign ownership of local insurers.

“The risks to our outlook are balanced, and stem from whether a future India-US trade deal that meaningfully lowers tariffs on US bound exports occurs,” BMI said.