Blitz Bureau
NEW DELHI: The upcoming Goods and Services Tax (GST) reforms, which aim to cut rates and boost private consumption, could offset the US tariff impact, BMI, a Fitch Solutions company, said on August 28, adding that India remains the fastest-growing emerging market economies in Asia through this decade. India’s GDP is projected to hold above 6 per cent, even as additional US tariffs hit certain industries, according to the note by BMI.
“We forecast India’s economic growth to steadily slow to just above 6.0 per cent by the decade’s end, slightly below the 2010-2019 pre-pandemic average of 6.5 per cent, yet still positioning India among Asia’s fastest-growing economies,” Fitch said. It further stated that productivity is projected to grow around 5 per cent over the coming decade, providing substantial momentum to GDP growth.
“We previously estimated that a 25-percentage point increase in the ‘reciprocal’ tariff would slow real GDP growth in FY2025/26 (April-March) and FY2026/27 by a further 0.2 per cent. As such, we have revised down our forecasts accordingly and now expect the economy to expand by 5.8 per cent in FY2025/26 and 5.4 per cent in FY2026/27,” it said. On GST reforms, Fitch said that “depending on the specifics, the GST reform could cancel out the drag on growth from the tariffs. Given that the details have yet to be confirmed, we highlight the GST reform as a slight upside risk to our growth forecast for now”.
