IMF raises India's GDP growth projection to 7.3 pc for FY26

The IMF on Monday raised India's growth projection to 7.3 per cent for fiscal 2025-26, up 0.7 percentage point from its October forecast, on the back of better-than-expected performance of the economy.

The Washington-headquartered multilateral lending agency has also revised India's Gross Domestic Product (GDP) growth forecast to 6.4 per cent for fiscal year 2026-27 beginning April 1, 2026, from its earlier estimate of 6.2 per cent.

"In India, growth is revised upward by 0.7 percentage point to 7.3 per cent for 2025 (fiscal FY26), reflecting the better-than-expected outturn in the third quarter of the year and strong momentum in the fourth quarter," it said in its World Economic Outlook (WEO) update.

Growth is projected to moderate to 6.4 per cent in 2026-27 and 2027-28 as cyclical and temporary factors wane, the International Monetary Fund (IMF) said.

According to India's statistics ministry, GDP during April-September of 2025-26 registered a growth rate of 8 per cent, on the back of a robust 8.2 per cent growth in July-September period. The Indian economy is likely to expand by 7.4 per cent in the current fiscal, according to the First Advance Estimates released by Ministry of Statistics and Programme Implementation (MoSPI). The growth during 2024-25 fiscal was 6.5 per cent.

On inflation, IMF said it is expected to go back to near target levels after a marked decline in 2025 driven by subdued food prices. The Reserve Bank has a target to maintain consumer price index (CPI) based headline inflation at 4 per cent, with a margin of 2 per cent on either side.

The IMF update further said that the global growth is projected to remain resilient at 3.3 per cent in 2026 and at 3.2 per cent in 2027. The forecast marks a small upward revision for 2026 and no change for 2027 compared with that in the October 2025 WEO.

In emerging market and developing economies, growth is expected to continue to hover just above 4 per cent in 2026 and 2027. Relative to the projection in October, growth in 2025 for China is revised upward by 0.2 percentage point to 5 per cent, the IMF said.

Global headline inflation is expected to decline from an estimated 4.1 per cent in 2025 to 3.8 per cent in 2026 and further to 3.4 per cent in 2027, it said.