India to maintain fastest growth rate among the largest economies: World Bank

The World Bank says India's economic growth is projected to moderate to 6.3% in FY2025/26, a 0.4 percentage point downgrade from January 2025 forecasts but similar to its update in April 2025. According to the World Bank's 'Global Economic Prospects' report, a rebound to 6.5% in FY2026/27 and further growth to 6.7% in FY2027/28 anticipated in India's economic growth.

This moderation in growth reflects a slowdown in investment on the demand side and a deceleration in industrial output growth on the supply side. While this represents a slowdown from FY2023/24's 9.2% surge, India remains the fastest-growing major economy in South Asia, driven by resilient private consumption and fixed investment.

The World Bank report states, "India is projected to maintain the fastest growth rate among the world’s largest economies, at 6.3 per cent in FY2025/26 (April 2025 to March 2026). Nevertheless, the forecast for growth in FY2025/26 has been downgraded by 0.4 percentage point relative to January projections, with exports dampened by weaker activity in key trading partners and rising global trade barriers."

India's investment growth is expected to slow, primarily reflecting a surge in global policy uncertainty, according to the World Bank. "In FY2026/27 and FY2027/28, growth is expected to recover to 6.6% a year, on average, partly supported by robust services activity that contributes to a pick-up in exports."

The World Bank also notes that inflation in India will remain contained over the forecast horizon, assuming normal seasonal conditions. The country's projected merchandise trade deficits are expected to be only partly offset by surpluses in services trade.

In South Asia, excluding India, current account deficits are anticipated to widen slightly in 2025, mainly due to an increase in merchandise trade deficits stemming from a slowdown in exports, despite stronger remittance inflows in most countries.

The World Bank's projections align with the Reserve Bank of India (RBI), which, in its recently concluded Monetary Policy Committee meeting announcement, stated that real GDP growth for 2025-26 is projected at 6.5%, with Q1 at 6.5%, Q2 at 6.7%, Q3 at 6.6%, and Q4 at 6.3%, with risks evenly balanced.

According to the provisional estimates released by the National Statistical Office (NSO) on May 30, 2025, real GDP growth in Q4:2024-25 stood at 7.4% against 6.4% in Q3. With this, real GDP growth stood at 6.5% for FY2024-25, while real Gross Value Added (GVA) recorded growth of 6.4%.