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

ENA Economy 2026-01-14 13:38:04 New Delhi, Jan 14 (KNN) The World Bank has raised Indias 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 Indias 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 Indias potential growth, and enhance resilience to external shocks. Growth Outlook for FY28 The World Bank expects Indias 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. Indias surplus in services trade is expected to partly offset its merchandise trade deficit. Inflation is projected to converge to the Reserve Bank of Indias target in FY27, assuming stable seasonal conditions help contain food price pressures. Indias Recent Growth Performance The World Bank estimated Indias 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) 44765 https://knnindia.co.in/news/newsdetails/economy/world-bank-upgrades-indias-fy27-growth-outlook-on-strong-domestic-demand 2026-01-14 13:38:04 knnindia.co.in World Bank Upgrades India’s FY27 Growth Outlook On Strong Domestic Demand