OECD Lowers India’s Growth Forecast for FY26 and FY27

The Organisation for Economic Co-operation and Development (OECD) has revised India’s growth projections downward for the coming years, citing economic uncertainty and global challenges. While the country is expected to maintain its position as the fastest-growing major economy, the latest estimates reflect a more cautious outlook compared to previous forecasts.

India’s Growth Outlook Revised Downward

The Organisation for Economic Co-operation and Development (OECD) has reduced India’s growth forecast for FY26 to 6.4% from its earlier estimate of 6.9%, citing economic uncertainties. The 38-member organisation also lowered the projection for FY27 to 6.6% from 6.8%. Despite this, India is set to retain its position as the fastest-growing major economy over the next two years.

For the current fiscal year, growth is estimated at 6.3%, with a slight increase to 6.4% in FY26. The OECD’s projection is more conservative than that of the Reserve Bank of India (RBI), which maintained a 6.7% forecast for FY26 in its February outlook. The Economic Survey placed India’s growth within the range of 6.3% to 6.8% for the same period.

Inflation Concerns and Global Economic Trends

The OECD also raised its inflation forecast for the coming fiscal year to 4.5%, up from 4.2%, diverging from the RBI’s outlook. However, inflation is expected to decline to 4.1% in FY27.

Speaking on global economic conditions, OECD Secretary-General Mathias Cormann said, “The global economy has shown some real resilience, with growth remaining steady and inflation moving downwards. However, some signs of weakness have emerged, driven by heightened policy uncertainty.”

Cormann also highlighted concerns over trade restrictions, stating, “Increasing trade restrictions will contribute to higher costs both for production and consumption. It remains essential to ensure a well-functioning, rules-based international trading system and to keep markets open.”

Conclusion

While India’s growth prospects have been slightly downgraded, it remains the fastest-growing major economy. The OECD’s cautious stance on inflation and trade highlights potential risks, even as global economic resilience persists.

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