World Bank Revises India’s FY27 GDP Growth Projection to 6.6%

The World Bank on Wednesday slightly upgraded India’s growth forecast for the 2026-27 fiscal year to 6.6%, citing supportive consumer demand from GST rate cuts. However, it warned that ongoing geopolitical tensions in West Asia could weigh on growth. For context, the Reserve Bank of India (RBI) has projected 6.9%, the OECD estimates 6.1%, and Moody’s Ratings expects 6% growth for the same period.

Strong Domestic Demand Drives FY26 Growth

In its South Asia Economic Update, the World Bank estimated that India’s economy accelerated from 7.1% in FY25 to 7.6% in FY26 (April 2025–March 2026), powered by robust domestic demand and resilient exports.

Private consumption showed notable strength, supported by low inflation and rationalisation of the Goods and Services Tax (GST).

FY27 Outlook: Deceleration Amid Global Headwinds

The World Bank noted that while GST reductions are likely to support consumer spending in the first half of FY27, elevated global energy prices may limit disposable incomes. “Growth is projected to decelerate to 6.6% in FY27, reflecting headwinds from the Middle East conflict,” the report said.

Government consumption is expected to ease due to higher subsidy outlays for cooking fuel and fertilisers, while investment growth could moderate amid rising input costs and uncertainty.

Improved export access to the United States and European Union may be tempered by slower growth in major trading partners.

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Geopolitical Risks and Historical Context

The report also highlighted the uncertainty from the West Asia crisis. On February 28, the US and Israel launched strikes on Iran, prompting retaliation from Tehran. A two-week ceasefire involving Iran, the US, and Israel came into effect on April 8, briefly stabilising global energy markets.

Earlier, in January, the World Bank’s Global Economic Prospects report had projected India’s FY27 growth at 6.5%. Other forecasters have since revised projections to a range of 5.9%–6.7%, reflecting the ongoing geopolitical uncertainties.

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