The International Monetary Fund (IMF) has upgraded India’s economic growth forecast for the fiscal year 2026-27 (FY27) by 60 basis points to 7%, citing strong domestic demand and robust services activity. This revision was announced during the IMF’s annual meetings in Bangkok and reflects stronger-than-expected economic momentum despite global challenges like geopolitical tensions and high energy prices.
The IMF’s latest World Economic Outlook (WEO) raised India’s GDP growth projection for FY27 to 7% from 6.4% estimated in July. The FY28 forecast was also increased to 7% from 6.7%, indicating sustained economic momentum. This upgrade reverses the IMF’s earlier downgrade in July, which was attributed to higher energy prices and global uncertainty. However, resilient domestic consumption and economic activity have helped mitigate these concerns.
Other financial institutions have also revised their growth forecasts upward. The Reserve Bank of India (RBI) increased its FY27 real GDP growth forecast to 7.1% from 6.7% in August. The World Bank raised its projection by 50 basis points to 7.1%, while the Organisation for Economic Cooperation and Development (OECD) increased its estimate by 80 basis points to 7.1%. The Asian Development Bank, S&P Global Ratings, and Fitch Ratings have also raised their growth expectations to around 7%, citing strong domestic demand and economic activity.
The IMF cautioned that India’s growth outlook remains vulnerable to external shocks, such as higher oil prices, which could impact inflation and the current account. A slowdown in major trading partners, including China, could also affect merchandise exports and investment sentiment. Despite these risks, the IMF highlighted India’s relative resilience, supported by sustained domestic consumption and services activity. The report emphasized the importance of free trade agreements in lowering trade barriers and strengthening supply chains, which could further benefit India’s economy.