World Bank raises India’s FY27 GDP forecast to 6.6%:PM Modi’s GST rate cut to drive growth

The World Bank has slightly increased its forecast for India’s economic growth in the financial year 2026-2027 (FY27) to 6.6% from 6.5%, earlier. This positive outlook is driven by PM Modi’s GST rate cut, strong domestic consumer demand and the country’s ability to continue exporting goods effectively. India’s economy has been performing well, with growth expected to jump from 7.1% in the financial year 2024-2025 to 7.6% in 2025-2026. Lower inflation in the past and simplified Goods and Services Tax (GST) have encouraged people to spend more. West Asia war to hit India’s growth: World Bank However, the World Bank cautions that the ongoing crisis in West Asia could negatively impact India’s growth. While recent GST rate cuts are expected to boost consumer spending in the short term, rising global energy prices, fueled by Middle East tensions, could squeeze household budgets. The Central Government may also need to increase spending on subsidies for essential items like cooking fuel and fertilizers, potentially limiting funds available for other investments. Additionally, slower economic growth in major trading partners like the United States and the European Union could hinder India’s export growth. RBI’s GDP prediction higher than World Bank The World Bank’s current projection is slightly higher than its previous estimate of 6.5% made in January. Other organizations, such as the Reserve Bank of India (RBI), the OECD, and Moody’s Ratings, have offered varying growth forecasts for India, ranging from 6.0% to 6.9%. The World Bank emphasizes the uncertainty surrounding the West Asia crisis and its potential impact on the global economy. A recent ceasefire agreement between Iran and the US offers some hope, but the situation remains volatile and could affect energy markets and overall economic stability.