World Bank lowers India's growth forecast for FY26 by 40 basis points to 6.3%
The World Bank in its latest ‘South Asia Development Update’ has lowered India’s economic growth forecast for 2025-26 by 40 basis points to 6.3 per cent, over global economic weakness and policy uncertainty. In India, growth is expected to slow from 6.5 per cent in 2024-25 to 6.3 per cent in 2025-26 as the benefits to private investment from monetary easing and regulatory streamlining are expected to be offset by global economic weakness and policy uncertainty.
For 2024-25, India’s growth forecast has been lowered by 50 basis points to 6.5 per cent. It stated ‘Amid increasing uncertainty in the global economy, South Asia’s growth prospects have weakened, with projections downgraded in most countries in the region.’ World Bank projects regional growth to slow to 5.8 per cent in 2025-0.4 percentage points below October projections-before ticking up to 6.1 per cent in 2026.
This outlook is subject to heightened risks, including from a highly uncertain global landscape, combined with domestic vulnerabilities, including constrained fiscal space. Besides, the Reserve Bank of India also recently lowered the growth forecast for the current fiscal 2025-26 to 6.5 per cent from 6.7 per cent, amid uncertainties arising from trade wars following the reciprocal tariffs announced by the US.
