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Informist, Thursday, Jun. 11, 2026

 

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--World Bank retains India FY27 GDP growth forecast at 6.6%
--World Bank raises India FY28 GDP growth forecast by 60 bps to 7.2%
--World Bank projects India FY29 GDP growth forecast at 7.0%
--World Bank: India FY27 growth seen easing on pvt demand growth slowdown
--World Bank: India FY27 growth seen easing on higher energy prices
--World Bank: Lower US tariffs, trade pacts may soften war hit on India econ
--World Bank: India econ activity robust despite high war-led uncertainty
--World Bank: India growth seen rising in FY28, FY29 on firm domestic demand
--World Bank: India fiscal deficit seen rising on higher subsidy bill
--World Bank: Slower capex to partly offset lower tax revenues in India
--World Bank: Trade pacts, reforms to support FDI inflows in India

 

NEW DELHI – The World Bank expects growth in India to slow down in the current financial year due to weaker private demand growth owing to higher energy prices. However, economic activity in India is expected to pick up pace over the next two years, thanks to strong domestic demand, the World Bank said Thursday.

 

The multilateral body retained its forecast for India's GDP growth in FY27 at 6.6%, while raising the projection for FY28 by 60 basis points to 7.2%. The World Bank's growth forecast for the current financial year is the same as the Reserve Bank of India's. 

 

The Indian economy grew 7.7% in FY26 despite high US tariffs during the year. However, the war in West Asia and the resultant higher energy and input costs are seen slowing down growth in India this year, the World Bank said. 

Lower US tariffs—currently at 10% against 50% during a large part of FY26--and the expected implementation of free trade agreements will likely mitigate the impact of weaker external demand due to the war, the World Bank said in its Global Economic Prospects report. The trade agreements and structural reforms undertaken to improve the business environment are also seen supporting foreign direct investment inflows in India, the report said.

 

"Despite heightened uncertainty related to the conflict, economic activity in India remained robust early this year, supported by resilient domestic demand," the World Bank said in the report. "Private consumption, particularly in rural areas, has been strong, with urban demand recovering."

Growth is then anticipated to rebound over the next two fiscal years, driven by firming domestic demand and a pickup in export growth, the World Bank said. The multilateral body projects India's GDP to grow 7.2% in FY28 and 7.0% in FY29.  

GOVERNMENT FINANCES

Fiscal deficit in India, along with some other economies, are projected to rise owing to increases in subsidies intended to counteract the surges in energy prices, the World Bank said. "Weaker revenues stemming from tax cuts and subdued tourism activity are also projected to erode fiscal balances," the multilateral body said.

 

Informist Tuesday reported, citing a government official, that the fertiliser subsidy is seen doubling in FY27 from the Budget estimate of INR 1.71 trillion. Despite this, the government expects to meet its fiscal deficit target for FY27 with help from higher-than-Budgeted disinvestment receipts and the economic stabilisation fund.

 

While the Budget pegged FY27 fiscal deficit at 4.3% of GDP, the government now sees it at 4.5% of GDP, following a downward revision in India's nominal GDP under the new series.

 

According to the World Bank, lower revenues due to tax reforms in FY26 are expected to be partly offset by slower capital expenditure growth and reductions in non-essential current spending.  End

 

Reported by Shubham Rana

Edited by Deepshikha Bhardwaj

 

 

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