World Bank Revises India’s FY26 GDP Projection to 6.3% Amid Global Uncertainties

The World Bank has cut India’s GDP growth forecast for the financial year 2025-26 to 6.3%, down from 6.7% projected earlier. The update was released as part of the Bank’s latest South Asia Development Update. The revision follows concerns over global economic uncertainty and its likely impact on investment and trade.

Comparison with Other Estimates

The revised projection is slightly below the 6.5% estimate from the Reserve Bank of India (RBI) and comes a day after the International Monetary Fund (IMF) also lowered its forecast for India to 6.2% from 6.5%. For FY25, the World Bank now expects growth at 6.5%, down from its earlier estimate of 7.0%.

Domestic Trends

The report points to a combination of factors behind the downgrade. These include a slower pace of private investment and public capital expenditure falling short of targets in the previous year. While tax cuts and regulatory changes have been introduced to support consumption and investment, the benefits are likely to be limited by weak external demand and uncertain global conditions.

The World Bank also noted the recent correction in India’s equity markets, which could affect private consumption. India ranked second globally in terms of IPO value in 2024, just behind the US.

Read more: IMF Cuts India’s FY26 Growth Forecast to 6.2% Amid Global Uncertainty

Impact on the Region

Growth in the South Asian region is also expected to slow. The World Bank has revised its regional forecast to 5.8% in 2025, 0.4 percentage points lower than its previous estimate. For 2026, growth is expected to pick up slightly to 6.1%.

Forecasts for neighbouring countries:

• Bangladesh: 3.3% in FY25, 4.9% in FY26
• Pakistan: 2.7% in FY25, 3.1% in FY26
• Sri Lanka: 3.5% in FY25, 3.1% in FY26
• Bhutan: 6.6% in FY25, 7.6% in FY26

India, along with other countries in the region, is managing high debt service costs. As per the reports, fiscal deficits are expected to range between 7% and 17% of GDP in 2025 across South Asia.

Conclusion

India’s GDP growth for FY26 is now projected at 6.3%. The revision reflects changes in external conditions and updated regional forecasts.

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