World Bank raises India’s GDP forecast to 7.1% for FY27:Indian economy performs better than expected amid global tensions

The World Bank has raised its estimate for India’s GDP growth in financial year 2026-27 to 7.1%. In April, it had projected a GDP growth rate of 6.6% for FY27. The institution said this in its latest report, ‘India Development Update’, released on Tuesday, 6 October. Despite global trade and tensions around the world, the Indian economy has performed better than expected. GDP growth of 7.8% recorded in the first quarter of financial year 2026-27, from April to June, played a key role in the World Bank’s upgrade. Demand rises in villages and cities, exports also grow According to the World Bank, investment and domestic consumption, or private consumption, made the biggest contributions to India’s economic growth. Demand in both rural and urban areas: Demand has risen due to good agricultural output, government support, subsidies and low inflation. On the other hand, urban consumption has also seen a boost following tax relief and the GST cut. Exports a major positive: Despite adverse conditions globally, India’s exports have performed significantly better than expected, and are being considered the biggest positive factor for growth in FY27. Industrial activities regained momentum On the supply side, industrial activities have maintained momentum despite global challenges. Infrastructure and power see a boost: Growth in infrastructure and construction goods rose to 7.2% in the first quarter, compared with 6.1% last year. Meanwhile, demand for utilities increased due to the intense heat, enabling the electricity sector to record growth of 9.3%. Agriculture: The rainfall deficit through August had a marginal impact on rural demand. However, rainfall after July has made up for much of the shortfall, although the overall deficit has had a slight impact on agriculture. Economy grew at 7.8% in FY26 The World Bank said that India’s economy accelerated to 7.8% growth in FY26 after growing at a rate of 7.2% in FY25. Policies and an easy credit environment had offset the impact of global trade tensions. In FY27 too, the growth rate is expected to moderate in the coming quarters after remaining at 7.8% in the first quarter, but the overall trend will remain strong.