Washington/Mumbai: The World Bank on Tuesday revised India’s economic growth forecast for the current fiscal to 6.5%, up from its earlier estimate of 6.3%, citing strong domestic consumption and robust rural and agricultural performance. The report underlined that India is expected to remain the fastest-growing major economy in the world.
However, the bank also flagged risks from international trade tensions, particularly the 50% tariffs imposed by the US on roughly three-quarters of Indian exports, which are expected to impact the economy in the coming year. As a result, the GDP growth forecast for FY26/27 has been downgraded to 6.3% from 6.5%.
The South Asia Development Update (October 2025) highlighted that domestic factors such as agricultural output, rural wage growth, and reforms to the Goods and Services Tax (GST) — including fewer tax brackets and simplified compliance — have supported economic activity.
Overall, South Asia’s growth is expected to slow from 6.6% in 2025 to 5.8% in 2026, but the region will still outperform other emerging markets and developing economies (EMDEs). Inflation is expected to remain within or trend toward central bank targets.
