World Bank Projects India’s Growth To Moderate To 6.6% In FY27 Amid Rising Energy Costs

New Delhi, Jun 12 (KNN) India is projected to remain the world's fastest-growing major economy in FY27 despite a moderation in growth, with the economy expected to expand by 6.6 percent amid rising energy prices and higher input costs, according to the latest report by the World Bank.
 
World Bank Projects Moderation In Growth For FY27
 
The multilateral lender said India's growth is likely to slow from 7.7 percent in FY26 to 6.6 percent in FY27, reflecting softer private demand growth as businesses and consumers face higher energy and production costs.
 
However, the report expects growth to rebound to 7.2 percent in FY28, supported by stronger domestic demand and improved export performance, reported Business Standard.
 
Domestic Demand Continues To Support Economic Resilience
 
Despite uncertainty arising from the ongoing West Asia conflict, the World Bank noted that economic activity in India has remained resilient, driven largely by robust domestic demand.
 
Private consumption, particularly in rural areas, has continued to perform strongly, while urban demand has shown signs of recovery. The report also highlighted steady growth in tax collections from domestic sales as an indicator of sustained economic activity.
 
According to the World Bank, government measures aimed at easing inflationary pressures caused by higher energy costs and shortages of agricultural inputs, including fertilisers, have helped support economic stability. These measures include reductions in fuel taxes.
 
Trade Agreements And Lower Tariffs May Boost Exports
 
The report also pointed to potential support for India's exports from lower US tariffs and the anticipated implementation of free trade agreements.
 
It said reduced tariffs and expanding trade partnerships are expected to help offset weaker external demand arising from geopolitical tensions, particularly for merchandise exports.
 
South Asia Faces Impact Of West Asia Conflict
 
For the broader South Asian region, the World Bank projected economic growth of 6.3 percent in 2026, citing the impact of the West Asia conflict through higher energy prices, disruptions in oil and natural gas supplies, and pressure on remittances and tourism flows.
 
India is expected to remain the fastest-growing major economy in the region.
 
Developing Economies Face Slower Income Growth
 
The report also cautioned that per capita income growth across emerging markets and developing economies is likely to slow to its weakest pace since the pandemic. 
 
Excluding India and China, many developing economies could face nearly a decade of lost income convergence with advanced economies by 2028.
 
(KNN Bureau)