Source: ET
Context:
The World Bank, in its South Asia Development Update (October 2025), has revised India’s GDP growth forecast upward to 6.5% for FY2025-26, up from the earlier 6.3%, citing strong domestic demand and the positive impact of GST rate cuts.
Key Highlights:
- Revised Projection: India’s growth for FY26 raised to 6.5% (from 6.3% earlier).
- FY27 Outlook: Trimmed to 6.3%, reflecting tariff uncertainties and weaker external demand.
- Current Momentum: India’s GDP grew 7.8% in Q1 FY26, supported by robust consumption and investment.
- Export Risks: U.S. tariffs—up to 50% on nearly 75% of Indian goods exports—may weigh on manufacturing and external growth.
- Regional Outlook: South Asia’s growth projected to moderate from 6.6% (2025) to 5.8% (2026).
- Positive Drivers: Better rural demand, agricultural recovery, GST simplification, and improved compliance have strengthened domestic resilience.
- Structural Outlook: World Bank emphasized that AI adoption, trade liberalization, and productivity reforms can unlock higher long-term growth potential.
