India’s GDP Growth May Slow To 6.7% In FY27 Amid Rising Crude Prices: BMI

New Delhi, May 12 (KNN) India’s economic growth is expected to slow to 6.7 percent in FY27, down from an estimated 7.7 percent in FY26, as weakening domestic momentum and rising crude oil prices linked to the Iran conflict weigh on the economy, according to BMI.

Higher Oil Prices Threaten Growth Momentum 

The report said GDP growth could slow sharply in the current fiscal due to higher input costs, supply disruptions and the economic fallout of the ongoing Iran conflict, which has pushed global crude prices higher.

BMI revised its FY26 growth estimate upward by 0.1 percentage point to 7.7 percent and said India’s economy likely expanded 8 percent year-on-year in the January-March quarter of 2026, slightly above its earlier projection of 7.8 percent, reported PTI.

However, it maintained its FY27 forecast at 6.7 percent, stating that the benefits of tax reforms introduced in GST and income tax in 2025 are expected to fade as inflationary pressures rise due to higher fuel and input costs.

Domestic Demand Shows Signs Of Weakening 

The report noted early signs of slowing demand, pointing to vehicle registrations that grew 9 percent in April compared to 23 percent growth during January-March. 

Electricity generation also rose just 2.7 percent in the last quarter, while power consumption growth slowed to only 0.9 percent in March.

BMI warned that restricted supplies of energy and food could further dampen consumption while driving inflation higher. It also highlighted risks from a weak monsoon after forecasts of below-normal rainfall due to El Niño conditions.

The report said India remains among the most energy-sensitive economies in Asia and estimated that GDP growth could decline by 0.4 to 0.7 percentage points if Brent crude prices rise to around USD 90 per barrel.

Iran Conflict Adds Inflation Risks 

Global oil prices surged to nearly USD 105 per barrel on Monday after the United States rejected Iran’s peace proposal, raising concerns over continued disruption in the Strait of Hormuz, a key global energy trade route. Prices were around USD 73 per barrel before the conflict began and had touched a four-year high of USD 126 per barrel in April.

(KNN Bureau)