“We have upgraded our FY27 growth forecast to 7.1% from 6.6% in April, as growth has held up better than expected despite trade and geopolitical uncertainties,” the World Bank said in its latest India Development Update. File
The World Bank on Tuesday (October 6, 2026) raised India’s Gross Domestic Product (GDP) growth forecast for the current fiscal to 7.1%, up 0.5 percentage points from its April projections, driven by better-than-expected print for the first quarter.
“We have upgraded our FY27 growth forecast to 7.1% from 6.6% in April, as growth has held up better than expected despite trade and geopolitical uncertainties,” the World Bank said in its latest India Development Update.
India’s growth accelerated to 7.8% in FY26 from 7.2% in FY25, driven by strong investment and solid private consumption, as the favourable policy and credit environment outweighed trade tensions.
“Rural consumption initially outpaced urban demand supported by strong agricultural performance, rural income support, food subsidies, and low inflation, while urban consumption strengthened later in the year following income-tax relief and GST cuts,” it said.
“The momentum has carried into FY27, with GDP growing 7.8% in Q1, above expectations, before moderating in subsequent quarters,” it said.
“Private consumption is expected to remain the main driver of growth although a rainfall deficit through August is likely to weigh modestly on rural demand, while subdued government consumption will stay muted,” it said.
“The investment outlook is broadly unchanged, with heightened global uncertainty weighing on private investment as frontloading fades, partly offset by supportive financial and policy conditions, including stronger public investment,” it said.
“India’s exports have performed better than expected and are likely to provide the main upside to the FY27 growth outlook relative to the April forecasts,” it said.
On the supply side, it said, the industry is now forecast to perform better than initially expected and offset a weaker agricultural outlook. Since April, industrial activity has exceeded expectations despite global headwinds.
This partially reflects the stronger-than-expected front-loading earlier in the year, with infrastructure and construction goods growth accelerating to 7.2% in Q1 from 6.1% last year, as well as the higher summer utility demand, which drove the electricity sector to expand by 9.3% in Q1 compared to a 1.5% contraction last year.
“Although above-average rainfall since July narrowed the monsoon deficit, the overall rainfall shortage during southwest monsoon has weakened agricultural prospects,” it said.
The World Bank also said the services sector growth remained elevated despite a slowdown from the high base in FY26.
Published – October 06, 2026 08:43 pm IST
