World Bank raises India's growth forecast for FY26 to 7.2%

NEW DELHI: The World Bank on Tuesday raised India's growth projection for the current financial year to 7.2%, compared with 6.3% estimated in June, citing robust domestic demand due to strong consumption on the back of tax cuts and higher real rural income.

For next year, the World Bank has retained its growth projection at 6.5% with the assumption that 50% US tariffs will stay. "Despite higher tariffs on certain exports to the US - which accounts for about 12% of India's merchandise exports - the growth forecast has remained unchanged relative to June projections, primarily because adverse impacts of higher tariffs will be offset by stronger momentum in domestic demand and more resilient exports than previously anticipated," it said in the latest Global Economic Prospects.




It said that a resolution of the trade issues with the US could be an upside for growth. "Another upside risk is that further investment in new technologies, including artificial intelligence, could enhance productivity at a faster pace than expected, especially in economies better prepared to adopt them, such as India... However, the materialisation of the benefits will likely require the implementation of reskilling initiative."

The multilateral agency has projected 6.6% growth in 2027-28. It appeared optimistic on the fiscal situation.