World Bank Raises India GDP Growth Forecast

The World Bank has revised India’s economic growth outlook upward, projecting GDP growth at 7.2 per cent for the current fiscal year 2025–26. The revised estimate reflects strong domestic demand, supportive tax reforms, and resilient export performance despite global trade uncertainties. The projection was released in the World Bank’s flagship global assessment.

Revised Growth Projections for India

In its latest edition of “Global Economic Prospects”, the World Bank raised India’s growth forecast by 0.9 percentage points from its June estimate of 6.3 per cent. The institution noted that India is expected to remain the fastest-growing major economy globally. However, growth is projected to moderate to 6.5 per cent in 2026–27 before inching up to 6.6 per cent in 2027–28.

Drivers of Economic Momentum

The report attributes the stronger outlook to robust private consumption, improved rural incomes, and the sustained impact of earlier tax reforms. Domestic demand has remained resilient, offsetting potential headwinds from external trade pressures. The World Bank highlighted that services activity continues to anchor growth, while investment is expected to recover gradually alongside improved export performance.

Impact of Global Trade Conditions

The projections assume that existing 50 per cent import tariffs imposed by the United States remain in place throughout the forecast period. Despite higher tariffs on select exports to the US, the World Bank stated that India’s growth outlook remains unchanged from June expectations due to stronger-than-anticipated domestic demand and export resilience. The US currently accounts for about 12 per cent of India’s merchandise exports. The report also noted depreciation in the Indian rupee since May, driven by capital outflows amid heightened trade-related uncertainty.

Imporatnt Facts for Exams

• The World Bank publishes the Global Economic Prospects report twice a year.
• India follows an April–March fiscal year for GDP accounting.
• Domestic demand is a key driver of India’s economic growth.
• Trade tariffs influence capital flows and currency movements.

Comparison with Official Estimates

According to the First Advance Estimates released by the Ministry of Statistics and Programme Implementation, India’s economy is expected to grow by 7.4 per cent in the current fiscal. The World Bank also observed that the global economy has shown resilience despite rising trade barriers, supported by supply chain adjustments, strong risk appetite, and increased investment in artificial intelligence, masking divergent recovery trends across regions.