IMF raises India’s FY26 GDP growth forecast to 6.6%, trims FY27 projection by 20 bps

The International Monetary Fund (IMF) on Tuesday raised India’s growth forecast by 0.2 percentage points, projecting a 6.6 per cent expansion for the 2025-26 fiscal year, despite the threat of 50 per cent US tariffs. Growth is being supported by active consumer spending, which is helping the economy weather the impact.

India’s economy grew an impressive 7.8 per cent in April-June 2025, the fastest pace in five quarters, reinforcing its status as the world’s fastest-growing major economy, even amid uncertainties in the export sector. India’s financial year runs from April to March.

Growth outlook for FY27 cut amid tariff concerns

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While the current fiscal outlook improved, the IMF trimmed India’s projected growth for FY2026-27 to 6.2 per cent, down 0.2 percentage points. The report highlighted that rising US tariffs could weigh on exports and overall growth.

“Beyond China, emerging market and developing economies more broadly showed strength, sometimes because of particular domestic reasons, but recent signals point to a fragile outlook there as well,” the report noted.

Last week, the World Bank revised its projections, raising India’s FY26 growth forecast to 6.5 per cent from 6.3 per cent, while trimming FY27 growth to 6.3 per cent, citing similar concerns over US trade policy. “India is expected to remain the world’s fastest-growing major economy, underpinned by continued strength in consumption growth,” the World Bank noted in its South Asia Development Update.

Also Read: India rises to 4th spot in global income equality rankings World Bank

Inflation outlook

Meanwhile, the IMF projected India’s Consumer Price Index (CPI) inflation to remain within a manageable range, at 2.8 per cent in FY26 and 4 per cent in FY27, supporting a conducive environment for sustained domestic consumption and investment growth.

“By contrast, inflation in India, Malaysia, the Philippines, and Thailand surprised on the downside,” IMF pointed out in its report.

Also Read: RBI raises FY26 GDP projection on GST 2.0 boost, bountiful monsoon

RBI pegs GDP growth at 6.8% for FY26

The Reserve Bank of India (RBI), in its October 2025 Monetary Policy Report, projected India’s GDP growth for FY26 at 6.8 per cent, higher than both IMF and World Bank estimates. The central bank attributed the strong domestic outlook to robust consumption, investments, government spending, a favourable monsoon, GST 2.0 implementation, improved credit flow, and rising capacity utilisation.

The RBI expects quarterly growth in FY26 to moderate gradually (Q1: 7.8 per cent, Q2: 7.0 per cent, Q3: 6.4 per cent, Q4: 6.2 per cent), with FY27 projected at 6.6 per cent, assuming normal monsoon conditions and no major external shocks.

Global context and caution

Earlier, IMF Managing Director Kristalina Georgieva underscored India’s emerging role as a key engine of global growth amid slowing global expansion. “Global growth is forecast at roughly 3 per cent over the medium term, down from 3.7 per cent pre-pandemic. Global growth patterns have been changing over the years, notably with China decelerating steadily while India develops into a key growth engine,” she said.

Georgieva, however, cautioned that global resilience has not yet been fully tested, noting that “there are worrying signs the test may come.”