The World Bank has upped India's growth predictions for the fiscal year 2026-27 to 6.6%, stating that while GST rate cuts will stimulate consumer demand in the early months of the fiscal year, headwinds from the Middle East crisis could impact GDP.
The FY27 projection compared to RBI estimates of 6.9 percent, 6.1 percent from the OECD, and 6% from Moody's Ratings. Follow live updates.
The World Bank's South Asia Economic Update report, released on Wednesday, stated India's growth is expected to increase from 7.1% in FY25 to 7.6% in FY26 (April 2025-March 2026), owing to strong domestic demand and export resilience.

Private consumption grew strongly due to low inflation and GST rationalisation. However, growth is expected to slow to 6.6% in FY27 due to the Middle East crisis, according to the report.
Although the GST rate cut is likely to enhance consumer demand in the first half of FY27, rising global energy prices are expected to raise prices and limit consumers' discretionary income, according to the report.
Government consumption growth is likely to slow, resulting in increased subsidies for cooking fuel and fertilisers. The World Bank predicts that investment growth would slow as uncertainties and input costs rise.

Improved access to the United States and the European Union for Indian exports will be hampered by slower growth in major trading partners, it noted.
In its January Global Economic Prospects report, the World Bank forecast India's growth rate to be 6.5 percent in 2026-27.
The World Bank stated that the impact of the Middle East situation is highly unknown, and other forecasters have reduced their FY27 growth predictions to a range of 5.9 to 6.7 percent.
On February 28, the United States and Israel started military operations against Iran, prompting a massive counterattack from Tehran.
On April 8, Iran, the United States, and Israel agreed to a two-week cease-fire in the Middle East conflict, which has disrupted the global energy market.