World Bank raises India’s FY27 growth forecast to 7.1 percent

New Delhi: The World Bank on Tuesday raised India’s GDP growth forecast for FY27 to 7.1 percent from 6.6 percent projected in April, citing stronger-than-expected first-quarter performance despite trade and geopolitical uncertainties.

"We have upgraded our FY27 growth forecast to 7.1 per cent from 6.6 percent in April, as growth has held up better than expected despite trade and geopolitical uncertainties," the World Bank said in its latest India Development Update.

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The revision follows GDP growth of 7.8 percent in the first quarter of FY27, exceeding expectations. Growth is expected to moderate in subsequent quarters.

India’s economy expanded 7.8 percent in FY26, up from 7.2 percent in FY25, supported by strong investment and resilient private consumption. Favourable policy and credit conditions helped cushion the impact of trade tensions, the report said.

Private consumption is expected to remain the main growth driver in FY27. However, a rainfall deficit through August could modestly weaken rural demand, while government consumption is expected to remain subdued.

Rural demand initially led consumption growth in FY26, supported by agricultural performance, income support, food subsidies and low inflation. Urban spending strengthened later following income-tax relief and GST cuts.

The investment outlook remains broadly unchanged. Heightened global uncertainty is weighing on private investment as the boost from frontloading fades, partly offset by stronger public investment and supportive financial and policy conditions.

Exports have performed better than anticipated and are likely to provide the main upside to the FY27 outlook compared with April’s projections, the World Bank said.

On the supply side, stronger industrial performance is expected to offset a weaker agricultural outlook. Growth in infrastructure and construction goods accelerated to 7.2 percent in the first quarter from 6.1 percent a year earlier. Higher summer demand also lifted electricity sector growth to 9.3 percent, against a 1.5 percent contraction in the corresponding period last year.

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Above-average rainfall since July narrowed the monsoon deficit, but the overall southwest monsoon shortfall has weakened agricultural prospects, the report said.

Services growth remained elevated despite slowing from the high base recorded in FY26.

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