Our Bureau
New Delhi
Citing global economic weakness and policy uncertainty, the World Bank on Wednesday lowered India’s growth forecast for the current fiscal by 4 percentage points to 6.3 per cent. The financial institution had earlier projected India’s growth at 6.7 per cent for the fiscal year 2025-26.
The figures were released by the bank in its twice-yearly regional outlook where it also highlighted India’s disappointing growth in FY24-25 due to slower growth in private investment and public capital expenditures.
“In India, growth is expected to slow from 6.5 per cent in FY24/25 to 6.3 per cent as in FY25/26 as the benefits to private investment from monetary easing and regulatory streamlining are expected to be offset by global economic weakness and policy uncertainty,” said its South Asia Development Update, Taxing Times.
It continued, “Private consumption is expected to benefit from tax cuts, and the improving implementation of public investment plans should boost government investment, but export demand will be constrained by shifts in trade policy and slowing global growth.”
It suggested increasing domestic revenue mobilisation as a measure to strengthen fragile fiscal positions and increase resilience against future shocks.
On Tuesday, the International Monetary Fund (IMF) also lowered India’s GDP forecast for the current fiscal to 6.2 per cent from its January estimates of 6.5 per cent.
In its annual publication, the global body said that the growth outlook for the Indian economy is relatively more stable at 6.2 per cent in FY 25-26.
The body signified private consumption, especially in the rural areas as the backbone of Indian economy and said that the lowering of the 0.3 percentage points was impacted by the trade tensions and global uncertainties.
In January of the current year, the IMF had projected a growth rate of 6.5 per cent for both the fiscal years of 2026 and 2027, which will stay at 6.2 for the current fiscal year and 6.3 for the next fiscal year.
The Reserve Bank of India, on the other hand, has projected a growth rate of 6.5 percent for India, which is higher than the projections made by both the World Bank and IMF. The Indian bank has substantiated the forecast by announcing decisions taken by the Monetary Policy Committee (MPC) to boost the economy. In this regard, RBI Governor Sanjay Malhotra has highlighted that the agriculture sector is expected to perform well this year due to healthy reservoir levels and strong crop production.
He noted that manufacturing activity is also picking up pace, with business expectations remaining positive. Meanwhile, the services sector continues to show resilience, contributing steadily to economic growth.
