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IMF Boosts India's Growth Forecast: Why FY26 Looks Stronger

The IMF has upgraded India's growth projection for FY26 to 6.6%, marking a 0.2 percentage point increase from previous estimates. This positive revision stems from India's impressive 7.8% growth in the first quarter of the fiscal year. However, the outlook for FY27 has been downgraded to 6.2% due to concerns about US tariff impacts. Despite global economic headwinds, India continues to be recognized as a key driver of worldwide economic expansion.

Key Points: IMF Raises India FY26 Growth Forecast to 6.6 Percent

  • IMF attributes upward revision to strong 7.8% first quarter growth momentum
  • FY27 forecast cut to 6.2% due to US tariff impacts
  • World Bank also raised India growth forecast to 6.5% for FY26
  • Global growth expected to slow from 3.3% in 2024 to 3.1% in 2026
2 min read

IMF revises India's FY26 growth forecast up to 6.6%

IMF revises India's FY26 growth to 6.6% due to strong Q1 performance, while lowering FY27 forecast amid US tariff impacts and global slowdown concerns.

"In India, growth is projected to be 6.6 per cent in 2025 and 6.2 per cent in 2026 - IMF World Economic Outlook"

New Delhi, October 14

The International Monetary Fund (IMF) on Tuesday revised India's growth forecast for the fiscal year 2025-26 (FY26) upward to 6.6%, a 0.2 percentage point increase from its previous estimate of 6.4%.

This revision is largely due to India's strong growth momentum in the first quarter of FY26, which saw the economy grow at a rate of 7.8%

The upward revision is attributed mainly to the carryover effect from a strong first quarter, rather than any offsetting of recent US tariffs.

However, the IMF has lowered its growth forecast for the next fiscal year (FY27) by 0.2 percentage points to 6.2%, citing the impact of increased tariffs. The IMF has also downgraded its global growth forecast, expecting global growth to slow from 3.3% in 2024 to 3.2% in 2025 and 3.1% in 2026.

"In India, growth is projected to be 6.6 per cent in 2025 and 6.2 per cent in 2026. Compared with the July WEO Update, this is an upward revision for 2025, with carryover from a strong first quarter more than offsetting the increase in the US effective tariff rate on imports from India since July, and a downward revision for 2026. Compared with the pre-tariff forecast in October 2024, growth is projected to be cumulatively 0.2 percentage point lower," the IMF's October edition of World Economic Outlook added.

The World Bank has also raised its India growth forecast for FY26 to 6.5% from 6.3%, while trimming its projection for the next fiscal year by 20 basis points to 6.3%. The IMF's forecast is higher than S&P's estimate of 6.5% but lower than Fitch's estimate of 6.9%.

In 2024-25, the Indian economy grew by 6.5% in real terms. The government has maintained the GDP forecast at 6.3-6.8 per cent for 2025-26, even as US tariff uncertainty looms, affirming confidence in the country's robust domestic consumption.

IMF Managing Director Kristalina Georgieva stated that India is becoming a key engine of global growth, speaking ahead of the 2025 IMF-World Bank Annual Meetings.

In September, Global rating agency Fitch revised India's growth outlook for the fiscal year ending March 2026 to 6.9 per cent from its earlier projection of 6.5 per cent in June Global Economic Outlook (GEO).Another major credit rating agency, Crisil, has maintained India's GDP growth forecast for the current fiscal year, 2025-26, at 6.5 per cent, even as it sees downside risks emanating from US tariffs.

- ANI

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Reader Comments

R
Rohit P
While the upward revision is encouraging, I'm concerned about the FY27 downgrade to 6.2%. The US tariff impact seems significant. We need to diversify our export markets and strengthen domestic manufacturing.
S
Sarah B
As someone working in the IT sector, I'm happy to see India being called a "key engine of global growth." Our tech industry continues to drive innovation and create opportunities. Let's keep this momentum going! 💪
A
Arjun K
The different forecasts from IMF (6.6%), World Bank (6.5%), and Fitch (6.9%) show there's uncertainty. I hope the government focuses on infrastructure development and ease of doing business to sustain growth.
M
Michael C
Good to see international recognition of India's growth potential. However, I wish the article discussed how this growth is distributed across different income groups. Inclusive growth should be the priority.
K
Kavya N
As a small business owner in Mumbai, I can feel the positive economic sentiment. More customers are spending, and business is picking up. Hope the government continues supporting MSMEs! 🙏

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