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UN Forecasts India's Economy to Grow 6.4% in 2026, 6.6% in 2027

A United Nations ESCAP report projects India's economy will grow by 6.4% in 2026 and 6.6% in 2027. The nation's strong 7.4% growth in 2025 was fueled by robust rural consumption, GST cuts, and a surge in exports ahead of new US tariffs. However, economic activity moderated in late 2025 after US tariffs took effect, though services continued as a primary growth engine. The report also highlights risks from a new US tax on remittances and praises India's production-linked incentive scheme for fostering green industrial development.

Key Points: UN Report: India's Economic Growth Forecast for 2026-2027

  • Growth projected at 6.4% in 2026
  • 2025 growth driven by 7.4% expansion
  • Services sector remains key driver
  • US tariffs and remittance tax pose risks
  • PLI scheme lauded for green development
2 min read

India's economy expected to grow 6.4 pc in 2026, 6.6 pc in 2027: UN report

A new UN ESCAP report projects India's economy to grow 6.4% in 2026 and 6.6% in 2027, driven by rural consumption and services, despite trade headwinds.

"robust rural consumption, goods and services tax cuts and export front‑loading... supported India's strong growth. - UN ESCAP Report"

New Delhi, April 21

India's economy is projected to expand by 6.4 per cent in 2026 and 6.6 per cent in 2027, a new United Nations report has said.

The report from United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) said that economies in South and South‑West Asia grew 5.4 per cent in 2025, up from 5.2 per cent in 2024, driven largely by India's strong growth of 7.4 per cent in 2025.

The report further stated that robust rural consumption, goods and services tax cuts and export front‑loading ahead of the United States' tariffs supported India's strong growth.

However, the economic activity moderated in the H2 CY2025 after exports to the United States fell 25 per cent following the introduction of 50 per cent tariffs in August 2025. Services remained a key growth driver, THE United Nations said.

Inflation in India is forecast at 4.4 per cent in 2026 and 4.3 per cent in 2027, the report added.

The report noted that FDI inflows to developing Asian and Pacific economies declined amid trade tensions and geopolitical uncertainty, after a 0.6 per cent surge in 2024. FDI to the region has dipped 2 per cent in 2025, even as global flows surged by 14 per cent.

"Within the Asia-Pacific region, the countries that attracted the largest share of greenfield FDI in the first three quarters were India, Australia, the Republic of Korea and Kazakhstan with $50 billion, $30 billion, $25 billion and $21 billion in announced investments, respectively," the report said.

Asian and Pacific workers working overseas increased their personal remittances, cushioned the impact of vulnerable domestic employment conditions and helped sustain household consumption.

About 40 per cent of the remittances are used for essential spending in India and the Philippines, such as medical expenses.

"However, as the world's largest remittance recipient of $137 billion in 2024, India could face a sizeable loss as the United States has levied a 1 per cent tax on all remittances since January 2026," it said.

The report lauded India's production-linked incentive scheme, as a proof of macroeconomic policy fostering green industrial development through incentives for domestic manufacturing of solar photovoltaic, batteries and green hydrogen.

The scheme reduced import dependence and created new industrial beneficiaries with a vested interest in sustaining the transition, the report noted.

- IANS

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Reader Comments

P
Priya S
Robust rural consumption is the key takeaway for me. When our villages prosper, the whole nation prospers. The services sector continuing as a growth driver is excellent news for job creation. Let's hope the inflation forecast holds true.
M
Michael C
Interesting report. The 25% export drop to the US after the tariffs is a significant headwind, yet India still leads in greenfield FDI in the region. That's a testament to investor confidence. The focus on green industrial development (solar, batteries) is the right long-term strategy.
S
Shreya B
While the headline numbers are positive, the dip in FDI to the region while global flows surge is concerning. Geopolitical uncertainty is hurting us. We need to double down on 'Make in India' and create more resilient supply chains. Jai Hind!
R
Rohit P
The report is a mixed bag. 7.4% growth in 2025 is fantastic! But the moderation in the second half shows how vulnerable we are to external shocks like US tariffs. We must diversify our export markets aggressively. The remittance tax is another blow from the West.
K
Kavya N
As someone whose brother works in the Gulf, the point about remittances hits home. 40% for essential spending is absolutely true. That 1% US tax, while small for them, is a big deal for families here budgeting every rupee. The growth needs to be inclusive and protect the vulnerable.

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