Key facts
- India's GDP growth is projected at 6.6% for FY27, making it the fastest-growing major economy.
- The World Bank revised its FY27 forecast upward from 6.5% to 6.6%.
- Anticipated benefits from trade agreements and structural reforms are expected to boost foreign direct investment.
- Higher energy prices and rising input costs are projected to moderate growth from FY26's 7.7% to 7.2% in FY28 and 7% in FY29.
- Reductions in GST rates are expected to support consumer demand.
The World Bank projects India's economic growth to reach 6.6% in the fiscal year 2027, maintaining its status as the world's fastest-growing major economy. This forecast, an upward revision from the previously estimated 6.5%, is attributed to the anticipated positive impacts of upcoming free trade agreements and ongoing structural reforms aimed at enhancing the business environment and attracting foreign direct investment.
However, growth is expected to moderate from 7.7% in FY26 due to factors such as higher energy prices and increased input costs, which are likely to dampen private demand. Despite these headwinds, reductions in Goods and Services Tax (GST) rates are anticipated to provide some support to consumer spending. The World Bank's Global Economic Prospects report indicates that GDP growth is forecast to rebound in subsequent fiscal years, reaching 7.2% in FY28 and 7% in FY29, driven by strengthening domestic demand and an improvement in export growth.