World Bank Forecasts 6.3% GDP Growth for India in FY26 Amid Global Uncertainty
In its Global Economic Prospects report published in June 2025, the World Bank reaffirmed its forecast of a 6.3% GDP growth for India in the financial year 2025-26 (FY26). Even amid global economic uncertainties, India is projected to continue as one of the world’s key growth leaders.
India’s Growth Path Stays Firm
In early 2025, the World Bank originally projected India’s GDP growth for FY26 to be 6.7%. However, in April 2025, this estimate was lowered to 6.3%, mainly due to tightening global trade policies, sluggish external demand, and increasing policy uncertainties in key markets. Even after this downward revision, India’s growth rate remains robust compared to many other countries facing economic slowdowns.
The Indian economy continues to draw strength from steady domestic demand, higher public investment in infrastructure, and a rebound in rural consumption after last year’s challenges.
Global Slowdown Poses Obstacles
The World Bank has trimmed its global growth forecast to 2.3% for 2025, which marks one of the weakest growth phases outside of recession periods since 2008. The slowdown is driven by rising protectionist trade policies, geopolitical disruptions, ongoing supply chain challenges, and softening demand from key markets such as the United States, China, and Europe.
India’s relatively low dependence on exports shields it to some extent from these international pressures, allowing domestic growth drivers to remain effective.
Domestic Strengths Sustaining Growth
India’s economic expansion is supported by several core factors:
Strength in Infrastructure and Services: A surge in infrastructure projects and sustained growth in services is creating fresh employment and drawing new investments.
Resilient Consumer Spending: Both urban and rural consumption are on a recovery path, with rural areas showing clear improvement after weather-related setbacks last year.
Government Investment: The central government’s continuous push for large-scale infrastructure, transport corridors, and renewable energy projects is expected to maintain growth momentum.
The Reserve Bank of India (RBI) remains upbeat, forecasting a GDP growth of 6.5% for FY25, which is largely in line with the growth estimate provided by the World Bank. The RBI expects this steady growth trend to continue through FY27.
Potential Risks to Watch
The World Bank has flagged several risks that could impact India’s growth outlook:
Tightening Trade Policies: A surge in global trade barriers could pressure India’s exporters and restrict market access.
Financial Market Uncertainty: Fluctuating global interest rates and potential capital outflows may create financial stress for emerging markets like India.
Climate-Related Threats: Agriculture and rural income remain vulnerable to extreme weather events, which could disrupt output and consumption.
Geopolitical Pressures: Heightened political instability and energy market volatility could indirectly influence India’s trade and energy costs.
India’s Leadership in South Asia’s Growth
South Asia is anticipated to witness a 6.1% economic expansion in 2025, with India playing a pivotal role in propelling the region’s overall growth. India’s broad consumer base and expanding middle class position it to outperform other regional economies that are more reliant on global trade.
The World Bank has emphasized the need for continued policy vigilance, particularly regarding inflation control and maintaining price stability.
Final Outlook
India’s FY26 GDP growth projection of 6.3% emphasizes the country’s ability to maintain steady progress and withstand international economic challenges. Solid domestic consumption, infrastructure-led growth, and supportive policy measures provide a firm base for sustained expansion.
While India is in a comparatively stronger position, global risks such as trade restrictions, financial volatility, and geopolitical shifts must be carefully monitored. Future policy actions should also focus on structural reforms and climate resilience to secure long-term, inclusive growth.
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