India’s economic growth is projected to slow to 6.5% in fiscal year 2026-27 but remain the fastest among the world’s largest economies, the World Bank Group said in its Global Economic Prospects report released on Tuesday.
The forecast assumes that 50% import tariffs imposed by the United States remain in place through the period.
Despite higher US tariffs on certain Indian goods, the World Bank has kept India’s growth forecast unchanged from its June projections.
The report said the adverse impact of tariffs is likely to be offset by stronger momentum in domestic demand and exports proving more resilient than earlier anticipated.
Growth is expected to inch up to 6.6% in FY2027-28, supported by robust services sector activity, a recovery in exports and a pick-up in investment, it added.
The report estimated that India’s growth strengthened to 7.2% in FY2025-26, driven by resilient domestic demand.
According to the government, India’s economy is projected to grow at 7.4% in real terms in FY26, accelerating from 6.5% in FY25.
Inflation is expected to converge to the central bank’s target in FY2026-27, assuming normal seasonal conditions help contain food price pressures.
Fiscal consolidation is also set to continue, with a decline in current spending outweighing the impact of tax cuts, leading to a gradual reduction in the public debt-to-GDP ratio, the report said.
The World Bank said growth in South Asia strengthened to an estimated 7.1% in 2025, largely due to India’s resilient performance, which helped offset the impact of rising global trade tensions and heightened policy uncertainty.
However, South Asia’s growth is expected to slow to 6.2% in 2026, mainly due to the impact of increased US import tariffs on India’s export growth.
The World Bank downgraded its South Asia growth forecast for this year by 0.2 percentage point from June, citing higher-than-expected US tariffs and revised assumptions on the timing of their impact, now expected to spill over from 2025 into early to mid-2026.
Growth in South Asia is forecast to recover to 6.5% in 2027, as domestic demand firms and exports rebound, supported by strong services activity and easing political uncertainty in several economies, the report said.