The World Bank report states India’s economy to grow by 6.5% in FY26 and 6.7% in FY27. Despite global challenges, India is expected to be the fastest-growing major economy in 2025–26. The GDP growth is projected at 6.3%, the same as in April, but lower than the earlier forecast of 6.7% made in January. The key reason of downgrade is mainly due to weak industrial growth and low demand for exports. However sectors like Construction, services, and rural consumption are doing well and keeping the economy stable. India is likely to export more services like IT, business support, and software. The real estate and infrastructure sectors are expected to stay active, creating jobs and demand. This will bring in more money from other countries.
The RBI also expects 6.5% growth in FY26 and showed confidence in the economy by lowering the inflation forecast to 3.7% for the year. India’s inflation fell to 3.2% in April, the lowest in 5 years.
Considering the global economic situation, The world Bank expects slower growth in many countries due to problems like trade tensions, tariffs, and uncertain global policies. The World Bank cut the global growth forecast for 2025 to 2.3% (down from 2.7% in January). This would be the weakest global growth in 17 years, excluding full recessions. About 70% of countries saw their growth forecasts reduced.
The World Bank expects India’s public debt to reduce gradually. This is because of higher tax revenues and lower government spending.
The World Bank suggests countries to reduce tariffs to boost global growth by 0.2% in 2025–26 and should also diversify trade and adopt more open trade policies to deal with global protectionism. The average global growth rate since 2020 is now at its lowest level since the 1960s.