BMI, a Fitch Group company, has significantly upgraded India's economic growth outlook, raising its GDP forecast to 7.4% for the current fiscal year and 7% for FY27. The revised projections reflect strengthening economic fundamentals and a supportive policy environment that the research firm believes will drive sustained growth momentum.

Upgraded Growth Projections

The latest forecasts represent a notable upward revision from BMI's earlier estimates. The research firm has increased its FY26 GDP growth projection from 7.2% to 7.4%, while raising the FY27 forecast from 6.6% to 7%. These projections align closely with the National Statistics Office's own estimate of 7.4% GDP expansion for FY26.

Strong Quarterly Performance Momentum

India's economy has demonstrated robust growth in recent quarters, providing a solid foundation for the upgraded forecasts. The economy expanded by 7.8% in the first quarter (April-June) and accelerated to 8.2% in the second quarter (July-September) of FY26, according to official estimates. This compares favorably to the 6.5% growth recorded for the entire FY25.

BMI expects this momentum to continue, projecting that the economy will expand by more than 9% year-on-year in the third quarter (October-December) of FY26. The research firm noted that "foundation has already been laid for a strong October-December quarter."

Policy Environment Supports Growth Outlook

Several policy measures have contributed to the improved economic outlook. BMI highlighted that monetary and regulatory measures are expected to stimulate both investment and consumption over the 2026-27 fiscal period. Key policy developments include:

• Reforms to the goods and services tax system in 2025
• Changes to personal income tax systems that have reduced household tax burden
• Reserve Bank of India's monetary easing, with policy rate cuts totaling 125 basis points
• Implementation of new labour codes
• Decision to allow 100% foreign ownership of local insurers

Export Performance and Economic Indicators

The upgraded forecast is supported by encouraging export trends, particularly rising US-bound merchandise exports over the past two months. BMI cited this export performance, along with strong advanced GDP estimates and the favorable policy environment, as key factors supporting India's positive economic outlook.

Balanced Risk Assessment

While maintaining an optimistic outlook, BMI acknowledged that risks to the forecast remain balanced. The research firm specifically identified potential India-US trade agreements that could meaningfully lower tariffs on US-bound exports as a key variable that could influence future economic performance.

The NSO's projection implies that the government expects GDP growth to average around 7% year-on-year in the second half of FY26, suggesting sustained economic momentum through the remainder of the fiscal year.