World Bank Revises India GDP Growth Forecast Upward, Flags Inflation Risks

(MENAFN- KNN India) New Delhi, Apr 9 (KNN) The World Bank has revised India's GDP growth projection for FY27 upward to 6.6 percent in its latest South Asia Economic Update, from an earlier estimate of 6.3 percent, reaffirming the country's position as the fastest-growing major economy globally.

Growth Outlook Remains Strong Despite Moderation

The report noted that India's economic growth is estimated to have strengthened from 7.1 percent in FY25 to 7.6 percent in FY26, driven by strong domestic demand and resilient exports.

Private consumption remained a key growth driver, supported by low inflation and rationalisation of the Goods and Services Tax (GST).

However, growth is expected to moderate slightly to 6.6 percent in FY27 due to emerging global headwinds, particularly the ongoing tensions in West Asia.

Global Risks And Fiscal Pressures

The World Bank highlighted that elevated energy prices could increase inflationary pressures and reduce household disposable incomes.

Government consumption is projected to soften as higher subsidy outlays for cooking fuel and fertilisers weigh on fiscal spending. Investment growth is also likely to moderate amid rising input costs and global uncertainty.

While improved market access to regions such as the United States and the European Union may support exports, slower economic growth in major trading partners could offset these gains.

Inflation Trends And Regional Outlook

On inflation, the report noted that price pressures across South Asia had remained relatively subdued in early 2026. However, risks are rising due to higher energy costs and potential currency depreciation, which could push inflation above central bank targets if sustained.

In India, inflation is expected to edge higher in FY26 and FY27, driven by strong domestic demand, stabilising food prices, and rising global energy costs.

The World Bank also observed that while South Asian countries are increasingly adopting industrial policy measures, the outcomes have been mixed. Import restrictions have curtailed inbound shipments, but export-oriented strategies have yet to deliver significant gains.

(KNN Bureau)

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