India’s GDP Growth Projected at 7.6% for FY26, 6.6% for FY27: World Bank

The World Bank Group has projected India’s economy to grow 7.6% in FY26, before easing to 6.6% in FY27, as per news reports. The estimate for the current financial year had earlier been placed at 6.3% in October 2025. 

India is expected to remain the main contributor to growth in South Asia. The outlook is supported by domestic demand, along with tariff reductions and recent trade agreements, including a free trade agreement with the European Union. 

South Asia Growth to Moderate 

Across the region, growth is projected at 7% in 2025, slowing to 6.3% in 2026 due to external pressures. A recovery to 6.9% is expected in 2027. 

Despite the moderation, South Asia is still expected to grow faster than most other emerging markets. India’s economic activity continues to account for a significant share of regional output. 

External Risks Remain 

The report points to risks from global energy markets, given the region’s dependence on imports. Ongoing tensions in the Middle East could affect fuel prices and inflation. 

Further disruptions may lead to tighter monetary conditions and weaker remittance inflows. Other risks include financial market volatility and climate-related events such as cyclones in parts of the region. 

There is also uncertainty around the impact of artificial intelligence on services exports. 

Industrial Policy Findings 

Governments in South Asia are increasingly using industrial policy, at a higher rate than other emerging economies. Around half of these measures focus on the manufacturing sectors. 

These policies aim to support industries linked to higher productivity and wages. However, the outcomes have been mixed. Import restrictions have reduced imports, while export-focused steps have not led to a similar increase in exports. 

The services sector, which has generated more jobs outside agriculture, has seen limited policy focus. 

Read More: India Eases Commercial LPG Access for Select Sectors Under New Caps; Mandates State Action! 

Conclusion 

The report indicates that regional growth remains steady, led by India, though external risks and structural challenges continue to affect the outlook. 

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