After the IMF, the World Bank lowers India’s growth forecast to 6.3% for FY26

The World Bank in its latest ‘South Asia Development Update’ has lowered India’s growth forecast for 2025-26 by 40 basis points to 6.3%, over global economic weakness and policy uncertainty. In India, growth is expected to slow from 6.5% in 2024-25 to 6.3% 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%. 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% in 2025-0.4 percentage points below October projections- before ticking up to 6.1% in 2026.

Previously, the International Monetary Fund also lowered the GDP growth rate for India to 6.2%."For India, the growth outlook is relatively more stable at 6.2 per cent in 2025, supported by private consumption, particularly in rural areas," the IMF said in its World Economic Outlook (WEO).

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% from 6.7%, amid uncertainties arising from trade wars following the reciprocal tariffs announced by the US.