World Bank Cuts Down GDP Estimates For Indian Economy For FY26 To 6.3 Per Cent

The revised projection comes as the global economy faces mounting uncertainty and geopolitical pressures, which are likely to affect India’s external sector and investment climate.

The report also highlighted that demand for Indian exports will remain subdued due to shifting trade policies and a general slowdown in global commerce.

Source : ABPLIVE AI

India’s economic growth outlook for the fiscal year 2026 has been downgraded by the World Bank. The global lender now expects the Indian economy to grow at 6.3 per cent, marking a 0.4 percentage point reduction from its earlier forecast made in October 2024. 

The revised projection comes as the global economy faces mounting uncertainty and geopolitical pressures, which are likely to affect India’s external sector and investment climate.

According to the latest edition of the South Asia Development Update, the international lender cited subdued global growth and policy ambiguity as the main drags on India's near-term economic trajectory, reported Business Standard. “The benefits to private investment from monetary easing and regulatory streamlining are expected to be offset by global economic weakness and policy uncertainty,” the study noted.

Export Slowdown And Structural Challenges In Focus

The report also highlighted that demand for Indian exports will remain subdued due to shifting trade policies and a general slowdown in global commerce. On the domestic front, the World Bank pointed out that private consumption should gain some momentum owing to recent tax relief measures. Additionally, enhanced execution of public investment initiatives is expected to drive up government spending.

“Multiple shocks over the past decade have left South Asian countries with limited buffers to withstand an increasingly challenging global environment,” said Martin Raiser, World Bank vice-president for South Asia. He emphasised the need for “targeted reforms to address vulnerabilities such as fragile fiscal positions, backward agricultural sectors, and the impact of climate related shocks.”

For the broader South Asia region, the growth outlook for FY25 was revised to 5.8 per cent, down by 0.4 percentage points from the earlier forecast made in October 2024. The World Bank emphasized that improving domestic revenue collection would be crucial for shoring up fiscal resilience across the region.

The global body noted that India’s GDP growth  already moderated from 9.2 per cent in FY24 to an estimated 6.5 per cent in FY25—the lowest rate in four years—though this remains in line with the country’s long-term growth trend.

On a similar note, the International Monetary Fund also cut its growth forecast for India for FY26 to 6.2 per cent, lowering it by 30 basis points due to “escalating trade tensions and global uncertainty,” as outlined in its latest World Economic Outlook.