The World Bank has raised India’s growth forecast from 6.3 percent to 6.6 percent for the current financial year, owing to strong domestic demand and free trade agreements. World Bank expects India to remain the primary engine of growth in South Asia .
In India, growth is estimated to have accelerated from 7.1 percent in the financial year 2025 to 7.6 percent in Financial Year 26, owing to strong domestic demand and export resilience. Private consumption growth was particularly robust, supported by low inflation and rationalisation of the Goods and Services Tax.
The report said that, although the reduction in GST rates should continue to support consumer demand in the first half of Financial Year 27, elevated global energy prices are expected to put upward pressure on prices and constrain households’ disposable income.
The World Bank Group, in its twice-a-year regional outlook report, stated that the growth outlook is driven primarily by India’s performance, underpinned by robust domestic demand as well as tariff cuts and recent trade agreements, including the free trade agreement with the UK and European Union.
World Bank Vice President for South Asia, Johannes Zutt, said that despite a challenging global environment, South Asia’s growth prospects remain strong.
