World Bank retains India GDP growth estimate for FY27, raises FY28 forecast

US-headquartered multilateral development lender World Bank on Thursday maintained its GDP growth projection for India at 6.6 per cent in FY27 and raised its forecast for the next finacnial year by 60 basis points (bps) to 7.2 per cent.

For the financial year 2028-29, it forecasts growth of 7 per cent for the economy.

The global development institution's estimates come days after official data showed that the country's economy expanded 7.7 per cent in FY26, with a better-than-expected 7.8 per cent expansion in the final quarter.

The National Statistics Office (NSO) -- the nodal agency that compiles and maintains the country's core statistical data -- had pegged the full fiscal year growth at 7.6 per cent in February.

This month, the RBI lowered its full-year GDP growth projection for the current financial year to 6.6 per cent from its earlier estimate of 6.9 per cent, citing global uncertainties and rising geopolitical tensions.

The central bank mentioned three factors that pose downside risks to its growth outlook:

• Prolonged global supply chain disruptions
• Volatility in global financial markets
• Persistent weather-related shocks

It pegged economic growth at 6.6 per cent in the first quarter, 6.3 per cent in the second quarter, and 6.5 per cent and 6.8 per cent in the following quarters, respectively.

RBI's Economic Outlook: June update

The central bank pointed out that global economic conditions and sentiments continue to be frayed without any meaningful resolution of the West Asia conflict.

"While these have adversely impacted the domestic growth-inflation outlook, the economy at this point is relatively strong. We shall put in place policies to meet the challenges while taking measures to further strengthen the macroeconomic fundamentals of the country," said Governor Sanjay Malhotra.

The RBI kept the repo rate -- the key interest rate at which it lends funds to commercial banks -- on hold at 5.25 per cent after its Monetary Policy Committee's June review, retaining the policy stance at 'neutral', which enables it to move in either direction.

The decision comes against the backdrop of heightened geopolitical tensions in West Asia, rising global energy prices and disruptions to supply chains, which the central bank said could impact both growth and inflation.

While domestic demand remains resilient and manufacturing and services sectors activity continue to expand, there are incipient signs of moderation in some sectors as suggested by high frequency indicators, noted the central bank.

Noting that there are considerable risks to the baseline assessment of inflation and growth due to the uncertainty about the duration and intensity of the West Asia conflict, the MPC said its food outlook remains uncertain on account of the sub-normal south-west monsoon forecast and El Nino.

It also noted that it will continue to be data-dependent and will keep tracking the developments closely.

El Nino | Weather impact on agri growth

According to national weather forecaster IMD, the country is projected to receive about 10 per cent less precipitation than usual this monsoon (90 per cent of the long-period average), with an 84 per cent likelihood that rainfall will be below normal across key farming areas that depend on rain.

The weather office issued its second-stage long-range forecast last month. This marks the lowest monsoon forecast ever made by IMD ahead of the monsoon season.

Earlier, the RBI explicitly stated that the outlook for the country's agriculture sector in 2026-27 stays contingent upon the progress and distribution of the south-west monsoon, with El Nino conditions posing downside risks to its agriculture output.