World Bank Retains India’s FY26 GDP Growth

The World Bank, in its Global Economic Prospects Report (June 2025), retained India’s FY26 GDP growth forecast at 6.3%, while projecting a gradual decline in the public debt-to-GDP ratio due to higher tax revenues and lower current expenditures.

Key Highlights:

India’s Growth Outlook:

• FY26 GDP growth forecast: Retained at 6.3%.
• Despite global headwinds, India is set to maintain the fastest growth among large global economies.
• Growth moderation in FY25 attributed to slower industrial output, but rebound expected from FY27 onwards, averaging 6.6% annually.
• Services sector and export recovery are seen as key drivers of medium-term growth.

Fiscal Outlook and Debt Management:

• The World Bank noted India’s shift from a fiscal deficit target to a debt-to-GDP anchor.
• The government targets bringing debt-to-GDP down to 50% by FY31, allowing for a ±1% deviation.
• Fiscal consolidation will be aided by:
  • Higher tax revenues
  • Falling current expenditures

Regional & Global Trends:

• India’s import demand will support trade across the South Asia region.
• Global growth in 2025 is projected at 2.3%, the weakest in 17 years excluding recessions.
• Trade tensions, policy uncertainty, and geopolitical risks pose downside risks.
• The report encourages developing countries to:
  • Diversify trade
  • Enter regional trade agreements
  • Pursue strategic investment partnerships

Comparison of FY26 GDP Forecasts (India):