World Bank Pegs India FY27 GDP Growth At 6.5% On Strong Domestic Demand, Resilient Exports

India's gross domestic product is expected to grow by 6.5% in the financial year 2026-27 and 6.6% the following year, according to fresh World Bank projections released on Tuesday. To put in comparative terms, the global economy is projected to grow by 2.6% and emerging markets by 4% in calendar year 2026.

For the current fiscal ending March 31, 2026, GDP is estimated at 7.2%, on the back of robust domestic demand, reflecting strong private consumption, supported by earlier tax reforms and improvements in real household earnings in rural areas, the multilateral financial body said in its semi-annual Global Economic Prospects report.

Alongside resilient services exports, merchandise exports rose in November, despite a steep 50% US import tariff on many Indian goods. "This partly reflects buoyant demand from the United States and other trading partners, supported by efforts to diversify export markets to increase resilience," World Bank said.

While a slower growth rate in pencilled in for FY27, it is based on the assumption that the US tariff rate remain in place throughout the forecast horizon.

"Even so, India is expected to maintain the fastest growth rate among the world’s largest economies. Despite higher tariffs on certain exports to the United States—which accounts for about 12% of India’s merchandise exports— the growth forecast has remained unchanged relative to June projections, primarily because adverse impacts of higher tariffs will be offset by stronger momentum in domestic demand and more resilient exports than previously anticipated," the World Bank said.

Growth will inch up in FY28, underpinned by robust services activity, as well as a recovery in exports and a pickup in investment, the report said.

Moreover, inflation in India is expected to converge to the 4% target set by the Reserve Bank of India in FY27, assuming stable seasonal conditions contain food price inflation, the report further said.

The World Bank also said fiscal consolidation is set to continue in India over the next three years, with the effects of tax cuts outweighed by a decline in current spending, resulting in a gradual reduction in the public debt-to-GDP ratio.