The World Bank Raised Its Forecast for India's Growth in 2026-27 to 7.1 Per Cent on 6 October 2026, Up 0.5 Points From April, After 7.8 Per Cent in 2025-26

The World Bank raised its forecast for India’s economic growth in 2026-27 to 7.1 per cent on 6 October 2026, up 0.5 percentage points from the 6.6 per cent it gave in April. The figure is in the Bank’s India Development Update, released in New Delhi, which says growth held up better than expected despite trade and geopolitical uncertainties. The same report puts growth in 2025-26 at 7.8 per cent, up from 7.2 per cent the year before, and growth in the April to June quarter of 2026 at 7.8 per cent as well. This piece reads the report as it stood on 29 October 2026.

“FY27” in the Bank’s text means the financial year from 1 April 2026 to 31 March 2027, and “FY26” the year before it. A percentage point is one unit on the growth rate, so a rise from 6.6 to 7.1 is 0.5 points.

What the Bank released on 6 October

The press release is headed “India’s Growth Intact Despite Global Headwinds; AI Can Create New Opportunities through Policy Actions”. It says the economy is projected to grow 7.1 per cent in FY27, supported by domestic demand and strong exports, and calls India one of the fastest-growing major economies in the world and a contributor to global growth. A companion Bank report, the South Asia Economic Update, projects 6.9 per cent growth for South Asia in 2026, which the Bank describes as the fastest of any region.

The full report says it uses data up to 15 September 2026. Its baseline assumes that shipping through the Strait of Hormuz stays significantly impaired through 2026 and that oil markets return to pre-conflict conditions in early 2027. ThePrint (carrying a PTI report), The Pioneer and UNI reported the same numbers on 6 October.

What moved the forecast up

The Bank traces the strength to investment and consumption. In FY26 it says growth was driven by investment, which grew 8.0 per cent, and by private consumption, which supplied more than half of the growth. Rural spending led early in the year, helped by a good farm year, income support to farmers, food subsidies and low inflation. Urban spending picked up later, which the report links to income-tax relief and GST cuts. (For how the tax is shared out, see our explainer on how GST works.)

The first quarter of FY27 then came in above what forecasters had expected. The statistics ministry’s estimate of 31 August was 7.8 per cent, against the 7.0 per cent the Reserve Bank had projected on 5 August. The Bank’s report says investment grew 11.9 per cent in the quarter, mainly because of earlier-than-usual public capital spending and faster private investment. Private consumption grew about 7.1 per cent. On the output side, industry grew 8.6 per cent against 6.1 per cent a year earlier, manufacturing 9.2 per cent against 8.3, and services 10.0 per cent against 8.0. Our own piece on that release, India’s GDP grew 7.8 per cent in April to June 2026, goes through the ministry’s tables.

One small difference in the numbers is worth stating. The ministry’s provisional estimate of 5 June put growth in 2025-26 at 7.7 per cent. The Bank uses 7.8 per cent, which GKToday reports as the revised figure in the ministry’s National Accounts Statistics of 31 August.

Exports are the main upside

The report says exports have done better than expected and are the main upside to the FY27 outlook compared with the April forecasts. In the April to June quarter, goods exports measured in dollars grew 16.2 per cent, led by petroleum products, with refined petroleum exports up 36.6 per cent. Services did the other part: the services trade surplus rose to US$51.6 billion from US$47.9 billion a year earlier, and the Bank says it cushioned the current account.

Imports grew faster than exports, by 19.9 per cent, as energy and gold prices rose. The goods trade deficit widened to US$86.6 billion in the quarter from US$68.8 billion. Net exports still added to GDP growth in the quarter because import volumes fell while exports of services and manufactured goods rose, according to the report. The September numbers are in our piece on India’s goods exports for September 2026.

Where the Bank expects growth to ease

A forecast of 7.1 for the full year, after 7.8 in the first quarter, means the Bank expects slower growth for the rest of FY27. It gives three reasons. Higher inflation and the monsoon shortfall should reduce what households can spend. Private investment should ease in the second half because of last year’s higher base and because the stocking up that firms did earlier as a hedge against energy and supply disruptions fades. Public infrastructure spending is expected to slow in later quarters but stay strong.

For the full year it expects industry to grow 7.5 per cent and services 8.6 per cent. Beyond FY27, it projects 7.2 per cent for FY28 and 7.0 per cent for FY29, which it calls in line with the economy’s medium-term potential. It names GST rationalisation, trade and foreign direct investment liberalisation, labour-market reforms and measures to widen MSME access to finance as reforms expected to add momentum.

Other forecasters in the same weeks

The Reserve Bank of India’s Monetary Policy Committee, in its statement of 7 October 2026, projected real GDP growth of 7.1 per cent for 2026-27, with 7.2 per cent for the second quarter, 6.9 per cent for the third and 6.8 per cent for the fourth. In August it had projected 6.7 per cent, which is the figure UNI compared with the Bank’s on 6 October. The Asian Development Bank, in its September Outlook, put India at 7.0 per cent for the year ending March 2027. DD India reported that this was up from 6.6 per cent in July and cited the 7.8 per cent first quarter. The Reserve Bank’s 7 October statement also raised its policy repo rate by 25 basis points to 5.50 per cent and projected consumer price inflation of 5.2 per cent for 2026-27.

The risks the Bank lists

The Bank says risks are more balanced than in April but remain elevated on the downside. The main one is the length and intensity of the Middle East conflict, which could keep oil prices high and add to inflation, the current account deficit and public spending on subsidies. Consumer price inflation, which the report puts at a multi-year low of 2.1 per cent in FY26, rose from 3.5 per cent in April to 4.8 per cent in August 2026, mostly on food prices. The Bank projects the current account deficit, 0.7 per cent of GDP in FY26, at 1.5 per cent in FY27.

The press release adds El Niño and stock-market corrections that could cause volatile capital flows. The report notes a rainfall deficit through August, narrowed by above-average rain since July, that has weakened the farm outlook. Agriculture grew 3.6 per cent in the April to June quarter against 4.4 per cent a year before. The report also says youth unemployment rose, particularly among rural young women, partly because of weaker farm activity, while female labour force participation kept gaining. On the other side, it lists strong domestic demand, ample foreign exchange reserves and available policy space as buffers, and says a faster end to the conflict or better rainfall would improve the outlook.

The artificial intelligence chapter

The Update’s special chapter is on artificial intelligence. It says India is well placed to adopt AI because of its large technical workforce, its integrated IT sector and its digital public infrastructure. Private AI investment in India rose from US$1.2 billion in 2024 to US$4.1 billion in 2025, and global capability centres, the in-house technology and support offices of multinational firms, employed 2.36 million people in 2025 against 1.9 million in 2024. Paul Procee, the Bank’s acting country director for India, said in the release that India is one of the top 10 emerging-market performers on AI readiness. The report adds that adoption is at an early stage and that the long-term effects on growth and jobs remain uncertain.

The Reserve Bank’s next Monetary Policy Committee meeting is scheduled for 2 to 4 December 2026.