World Bank Lifts India’s FY26 Growth Forecast to 7.2%; FY27 Seen at 6.5%

World Bank has projected India’s economic growth at 6.5% in FY27, easing from an estimated 7.2% in the current fiscal, while maintaining that resilient domestic demand will continue to underpin expansion despite rising external headwinds. 

Domestic demand offsets external pressure 

In its latest Global Economic Prospects report released on January 13, the World Bank said the impact of higher US tariffs on Indian exports is expected to be cushioned by stronger-than-anticipated domestic momentum.  

The lender noted that consumption-led growth and internal demand dynamics have helped neutralise adverse trade-related shocks. 

The Bank said its growth forecast remains unchanged from earlier projections, as the negative effects of tariff increases are being balanced by robust demand conditions within the economy. 

FY26 outlook strengthened by consumption recovery 

The World Bank sharply upgraded its FY26 growth estimate by 0.9% to 7.2%, reflecting strong economic performance in the 1st half of the year.  

Private consumption has been a key contributor, supported by earlier tax reforms and rising real household incomes, particularly in rural India. 

The government’s first advance estimates released last week had pegged FY26 GDP growth slightly higher at 7.4%. 

Moderation expected, medium-term outlook stable 

Looking ahead, the World Bank expects growth to moderate modestly. For FY27, expansion is projected at around 6.6%, marginally lower than previous estimates.  

Over the medium term, the outlook remains constructive, with services-led activity expected to remain firm, alongside gradual improvement in exports and a pickup in investment. 

Global growth remains subdued 

At the global level, the World Bank expects economic growth to slow to 2.6% in 2026 from 2.7% in 2025. Growth in emerging market and developing economies is projected at 4%, while advanced economies are expected to expand by 1.6%. 

Among major economies, the US growth forecast has been revised slightly higher to 2.2% from 2.1% while China’s growth is expected to slow to 4.4% from 4.9%. 

Read More: India's GDP Growth at 7.0% for 2025 and 6.4% for 2026, Says Moody's! 

Conclusion 

While India’s growth is projected to moderate in FY27, strong domestic demand, stable services activity and a gradual investment recovery continue to position the economy among the fastest-growing major markets globally. 

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