World Bank Boosts India's Growth Forecast Amid Tariff Concerns

India's Economic Outlook Brightens

New Delhi: The World Bank has revised India's growth projection for the current fiscal year, increasing it from 6.3% to 6.5%. This adjustment positions India as the fastest-growing major economy, driven by robust consumption growth.

However, the World Bank has also warned that the recent 50% tariffs on Indian exports to the US could have significant repercussions in the upcoming year.

Additionally, the GDP growth forecast for 2026-27 has been adjusted downward from 6.5% to 6.3%.

"India is anticipated to maintain its status as the world's fastest-growing major economy, supported by strong consumption growth," stated the World Bank's South Asia Development Update (October 2025).

Domestic factors, particularly in agriculture and rural wage growth, have exceeded expectations. The government's reforms to the Goods and Services Tax (GST), which include reducing tax brackets and simplifying compliance, are expected to bolster economic activity.

"The forecast for FY26/27 has been revised downwards due to the imposition of a 50% tariff on approximately three-quarters of India's goods exports to the United States," the report noted.

Furthermore, growth in South Asia is projected to decline sharply from 6.6% in 2025 to 5.8% in 2026.

Despite this slowdown, growth rates are expected to remain higher than those in other emerging markets and developing economies (EMDEs).

Inflation is anticipated to stay within or trend towards the targets set by the central bank.