World Bank Upgrades India’s FY27 Growth Outlook On Strong Domestic Demand

New Delhi, Jan 14 (KNN) The World Bank has raised India’s FY27 growth forecast to 6.5 percent from 6.3 percent projected in October, citing stronger domestic demand and more resilient exports, though the estimate remains unchanged from its June projection last year.

In its Global Economic Prospects report, the World Bank said India is likely to remain the fastest-growing major economy, noting that higher US tariffs on some exports, despite the US accounting for about 12 percent of India’s merchandise exports, are expected to be offset by strong domestic demand and resilient export performance.

Upside Risks: Trade Resolution and Confidence Boost
The report highlighted upside risks, noting that easing global trade tensions, including a partial rollback of US tariffs, could boost exports and foreign capital inflows. Stronger business and consumer confidence may also drive higher investment and consumption than projected.

The World Bank also highlighted stronger investment in emerging technologies such as artificial intelligence as an upside risk, noting that wider AI adoption could lift productivity and job creation, raise India’s potential growth, and enhance resilience to external shocks.

Growth Outlook for FY28
The World Bank expects India’s growth to inch up to 6.6 percent in FY28, supported by robust services activity, a recovery in exports, and a pick-up in investment.

The report said that despite easier global financial conditions, private-sector credit growth in South Asia, including India, has stayed muted due to macroprudential curbs and weak demand. 

In India, risk-containment measures have moderated bank credit growth even as non-bank financing has expanded. It added that fiscal consolidation is expected to continue, with lower current spending offsetting tax cuts and gradually reducing the public debt-to-GDP ratio.

India’s surplus in services trade is expected to partly offset its merchandise trade deficit. Inflation is projected to converge to the Reserve Bank of India’s target in FY27, assuming stable seasonal conditions help contain food price pressures.

India’s Recent Growth Performance
The World Bank estimated India’s FY26 growth at 7.2 percent, driven by strong domestic demand, private consumption, tax reforms, and improved rural household earnings. 

Meanwhile, the first advance estimates released by the statistics ministry last week pegged growth for 2025–26 at 7.4 percent. The report also noted that merchandise exports rose in November despite higher US tariffs, reflecting buoyant external demand and efforts to diversify export markets.

(KNN Bureau)