Last Updated:
India remains one of the world’s fastest-growing major economies and a key contributor to global growth, the World Bank said in its latest India Development Update.
A worker checks the quality of shoes made inside a leather factory of Superhouse Group in Kanpur. (IMAGE: REUTERS FILE)
India’s growth story is showing little sign of losing momentum despite a turbulent global environment, with the World Bank on Tuesday raising its GDP growth forecast for the country for the current fiscal to 7.1 per cent, up from 6.6 per cent projected in April.
The upgrade, by 0.5 percentage points, comes on the back of robust domestic demand and stronger-than-expected exports, even as trade tensions and geopolitical uncertainties continue to weigh on the global economy.
India remains one of the world’s fastest-growing major economies and a key contributor to global growth, the World Bank said in its latest India Development Update.
“We have upgraded our FY27 growth forecast to 7.1 per cent from 6.6 per cent in April, as growth has held up better than expected despite trade and geopolitical uncertainties,” the multilateral organisation said.
India’s economy grew 7.8 per cent in FY26, accelerating from 7.2 per cent in FY25, as strong investment and resilient private consumption helped offset the impact of trade tensions.
The World Bank said India’s medium-term growth prospects remained strong, although it warned of elevated external risks.
Among the key risks are movements in global oil prices, the impact of El Nino and possible stock market corrections that could trigger volatility in capital flows.
Rural Demand, Urban Consumption Drive Growth
The growth story has also been broad-based, with rural consumption initially outpacing urban demand on the back of strong agricultural performance.
Urban consumption picked up later, helped by income-tax relief and GST cuts, the World Bank said.
The momentum has carried into FY27. India’s GDP grew 7.8 per cent in the first quarter, beating expectations, although growth is expected to moderate in subsequent quarters.
Private consumption is expected to remain the main engine of growth. However, a rainfall deficit through August could weigh modestly on rural demand.
Government consumption, meanwhile, is expected to remain subdued.
The investment outlook has remained broadly unchanged, with heightened global uncertainty weighing on private investment as the effect of frontloading fades.
This is expected to be partly offset by supportive financial and policy conditions, including stronger public investment.
Exports Emerge As Key Growth Driver
India’s export performance has been stronger than expected and is likely to provide the main upside to the FY27 growth outlook compared with the World Bank’s April projections.
On the supply side, industry is also expected to outperform earlier expectations and compensate for a weaker agricultural outlook.
Industrial activity has exceeded expectations since April despite global headwinds.
The World Bank attributed part of this strength to stronger-than-expected frontloading earlier in the year. Growth in infrastructure and construction goods accelerated to 7.2 per cent in Q1, compared with 6.1 per cent a year earlier.
Higher summer utility demand also boosted activity, with the electricity sector expanding 9.3 per cent in Q1, compared with a 1.5 per cent contraction in the same period last year.
Although above-average rainfall since July narrowed the monsoon deficit, the overall rainfall shortage during southwest monsoon has weakened agricultural prospects, it said.
The World Bank also said the services sector growth remained elevated despite a slowdown from the high base in FY26.
Assuming the energy supply chain returns to pre-conflict (West Asia conflict) conditions in early 2027, it said growth is projected to accelerate to 7.2 per cent in FY28 and ease to 7 per cent in FY29, in line with the economy’s medium-term potential.
The government’s recent reform programmes, including GST rationalisation, trade and FDI liberalisation, labour-market reforms and measures to improve access to finance for MSMEs are expected to gain momentum over the medium term, supporting growth, it said.
Last month, Asian Development Bank (ADB) and OECD and other global agencies like S&P and Fitch raised India’s FY27 GDP growth projection to around 7 per cent, boosted by robust June quarter economic activity and resilient domestic demand despite the West Asia conflict.
Paris-based Organisation for Economic Cooperation and Development (OECD) upped GDP growth forecast by 80 basis points to 7.1 per cent for FY27.
ADB, while raising the growth forecast to 7 per cent, from 6.6 per cent estimated in July, said the Indian economy has benefited from lower-than-expected supply disruptions and sustained capital inflows, which helped cushion the impact of the conflict in West Asia
Quick Answers
Ask News18The World Bank raised India’s GDP growth forecast for FY27 to 7.1 per cent, up from the 6.6 per cent projected in April.
Ask News18About the Author
Shankhyaneel Sarkar is a chief sub editor at News18. He covers international affairs, where he focuses on breaking news to in-depth analyses. He has over seven years of experience during which he has …Read More
October 06, 2026, 9:14 PM IST
Read More
Source link
[ad_3]
