The International Monetary Fund (IMF) has raised its projection for India's economic growth in FY27 by 0.6 percentage point to 7% in its October World Economic Outlook (WEO), signalling confidence in the country's domestic growth drivers despite mounting external pressures.
The revision follows the Reserve Bank of India's (RBI) latest monetary policy meeting, at which the central bank raised its GDP growth estimate for the current financial year to 7.1%.
The IMF has also lifted its FY28 growth projection for India by 0.3 percentage point to 7%, pointing to the durability of the country's expansion.
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Resilient domestic consumption and continued strength in the services sector are supporting the improved outlook, even as higher oil prices pose challenges. The assessment contrasts with China, whose 2026 growth forecast has been lowered to 4.5%.
Domestic Demand Underpins India's Growth Outlook
India's growth prospects continue to benefit from firm domestic spending and sustained activity in services, which have helped the economy withstand pressure from rising energy costs, according to the IMF's assessment.
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The WEO puts India's economic growth at 7.8% in FY26. The pace is expected to ease to 7% in FY27 and remain at that level in FY28.
The upward revision comes against a backdrop of increasingly varied growth trajectories across economies. The IMF noted that the impact of higher energy prices and the extent to which countries benefit from the global technology boom are contributing to differences in their economic performance.
India's longer-term prospects are also supported by its demographic profile, the scale of its domestic market and ongoing structural reforms, the IMF indicated. These factors are expected to underpin the country's growth potential over the medium term.
India's Outlook Contrasts With A Slower Global Economy
The IMF expects the global economy to expand by 3.1% in 2026, down from 3.5% in 2025, before growth improves to 3.4% in 2027.
China's growth trajectory is projected to weaken further. After expanding by 5% in 2025, the country's economy is forecast to grow by 4.5% in 2026 and 4% in 2027. Higher oil prices, subdued domestic demand and persistent structural headwinds are among the factors weighing on the outlook.
The divide is notable for emerging economies that depend heavily on imported energy, several of which face reduced growth prospects as energy costs rise. India's revised projections, by comparison, point to continued economic resilience.
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Higher inflation And A Widening CAD Pose Risks
The stronger growth outlook does not eliminate the risks facing India's economy. Rising commodity prices and pressure on the external balance remain key concerns.
The IMF expects India's consumer price inflation to average 5% in FY27, compared with 2% in FY26, before easing to 4.4% in FY28. Inflation reached 5.5% in September, its highest reading under the new series.
The IMF's FY27 inflation projection is marginally below the RBI's estimate of 5.2%.
India's current account deficit is forecast to increase to 1.5% of GDP in FY27, from 0.7% in FY26, before narrowing to 1.3% in FY28.
Globally, the outlook remains exposed to renewed disruptions in oil supplies, fresh trade-related tensions and tighter financial conditions. These uncertainties could weigh on economic activity, although India is projected to sustain comparatively strong growth over the forecast period.
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