World Bank raises India's growth projection to 6.5 pc for 2025-26

The World Bank on Tuesday raised India's growth forecast for the current fiscal to 6.5 per cent from 6.3 per cent estimated earlier, and said the country is expected to remain fastest-growing major economy, underpinned by continued strength in consumption growth.

The World Bank also cautioned that 50 per cent tariffs on Indian shipments imposed by the US will have implications on the country in the coming year.

It lowered the GDP growth forecast for 2026-27 from 6.7 per cent to 6.5 per cent. For fiscal 2027-28, the World Bank has projected a growth of 6.3 per cent.

"India is expected to remain the world’s fastest-growing major economy, underpinned by continued strength in consumption growth," said World Bank's South Asia Development Update (October 2025).

Domestic conditions, particularly agricultural output and rural wage growth, have been better than expected. The government’s reforms to the Goods and Services Tax (GST) — reducing the number of tax brackets and simplifying compliance — are expected to support activity.

"The forecast for FY26/27 has been downgraded...as a result of the imposition of a 50 per cent tariff on about three-quarters of India’s goods exports to the United States," it said.

The report further said growth in South Asia is expected to slow sharply from 6.6 per cent in 2025 to 5.8 per cent in 2026.

Despite this deceleration, growth will remain stronger than in other emerging market and developing economies (EMDEs) regions.

Inflation is expected to continue within or trend toward the central bank targets, it said.