India, May 12 -- India's economic growth is likely to decelerate to 6.7 per cent in the current fiscal, from 7.7 per cent in 2025-26, with the GDP expansion expected to slow significantly due to waning momentum and oil price shock from Iran war, BMI said on Monday. BMI, a Fitch Group firm, also said that the prospect of the Iran-US conflict escalating in scope presents downside risk to its growth outlook and India must balance spending needs on defence and fuel price stabilisation against fiscal consolidation agenda.

The tax reforms in GST and income tax carried out in 2025 will partly offset effects of cost-push inflation, BMI said, adding looser monetary policy will support capital spending, as increased uncertainty amid the war and hi...