World Bank Upgrades India’s FY27 Growth Outlook to 7.1% From 6.6%

The World Bank on Tuesday raised its forecast for India’s GDP growth in the current fiscal to 7.1 per cent, up from 6.6 per cent projected in April, citing stronger-than-expected economic activity and resilient domestic demand.

The upgrade came after India’s economy grew 7.8 per cent in the first quarter of FY27, exceeding expectations. The World Bank said growth has remained resilient despite trade and geopolitical uncertainties.

India’s growth accelerated to 7.8 per cent in FY26, from 7.2 per cent in FY25, supported by strong investment and private consumption. Favourable policy and credit conditions helped offset the impact of global trade tensions.

The World Bank expects private consumption to remain the main driver of growth in FY27. However, a rainfall deficit during the southwest monsoon could moderately weigh on rural demand, while subdued government consumption is expected to remain a drag.

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

Exports have performed better than expected and are likely to provide a key upside to the FY27 growth outlook, the multilateral lender said.

On the supply side, stronger industrial activity is expected to offset weaker agricultural prospects. Growth in infrastructure and construction goods accelerated to 7.2 per cent in Q1, compared with 6.1 per cent a year earlier. Electricity-sector growth also rose sharply to 9.3 per cent, against a 1.5 per cent contraction last year.

The World Bank cautioned that elevated global oil prices, El Niño risks and financial market volatility could pose downside risks. The services sector, meanwhile, continues to record elevated growth despite moderating from its high base in FY26.