India's FY26 Growth Projected at 6.3% by World Bank

The World Bank has kept India’s GDP growth forecast unchanged at 6.3% for FY26, according to its June 2025 Global Economic Prospects report. This is lower than the 6.7% projection made in January, with the revision linked to slower export demand and an increase in global trade restrictions.

Export and Policy 

The report attributes the downward adjustment to weak external demand from major trading partners and the impact of rising trade barriers. It also notes a likely slowdown in investment growth, pointing to global policy uncertainty as a contributing factor.

India’s economy had expanded by 6.5% in FY25, based on recent official data. The Reserve Bank of India (RBI) has also maintained a 6.5% growth projection for FY26, in line with its previous estimate.

Global and Regional Growth Trends

As per the report, global growth is now expected to be 2.3% in 2025, down from 2.7% projected earlier. This would make it the slowest rate since 2008, excluding global recession years.

The World Bank predicts South Asia's growth, excluding India, will see a modest rise to 3.6% in 2025 and then accelerate to 4.4% in 2026-27. This uptick is attributed to easing inflation and greater macroeconomic stability across several regional economies.

Among neighbouring countries:

• Bangladesh: 4.9% in FY26, 5.7% in FY27
• Pakistan: 3.1% in FY26, 3.4% in FY27
• Sri Lanka: 3.5% in 2025, average 3.1% in 2026-27
• China: 4.5% in 2025, 4% in the next year

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Inflation and Fiscal Outlook

The report notes that inflation in India is expected to remain contained, assuming stable seasonal conditions. Inflation touched a 5-year low of 3.2% in April, and the RBI recently lowered its forecast for the year to 3.7%.

On the fiscal side, the World Bank expects continued consolidation, with higher tax revenues and lower current expenditures contributing to a gradual decline in the public debt-to-GDP ratio.

Conclusion

India’s FY26 growth is projected at 6.3%, lower than earlier estimates but steady. The outlook reflects global trade-related challenges, moderated investment, and a stable domestic macroeconomic environment.

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