India GDP growth seen easing to 6.6% in FY27 amid West Asia tensions: World Bank

India’s economic growth is expected to moderate in the current financial year as global uncertainties, including tensions in West Asia and elevated energy prices, weigh on activity, the World Bank said on Wednesday.

In its South Asia Economic Update (April 2026), the World Bank said India’s gross domestic product (GDP) growth likely accelerated to 7.6% in FY26 (April 2025–March 2026), up from 7.1% the previous year, driven by strong private consumption and resilient exports.

“Private consumption growth was particularly robust, supported by low inflation and rationalisation of the Goods and Services Tax (GST),” the report said.

However, growth is projected to decelerate to 6.6% in FY27, reflecting headwinds from the Middle East conflict and broader global uncertainties.

The Bank noted that the impact of these risks remains uncertain as “other forecasters have revised down their growth projections to a range between 5.9% and 6.7%.”

The World Bank said higher global energy prices are expected to push up inflation and squeeze household disposable incomes in FY27, even as earlier GST rate cuts continue to support demand in the first half of the year.

“Government consumption growth is expected to soften to offset higher subsidy outlays for cooking fuel and fertilizers,” the report said.

“Investment growth is likely to moderate amid elevated uncertainty and rising input costs. Improved access to the United States and the European Union for India’s exports will be undermined by slower growth in major trading partners,” it added.

RBI growth projection

The Reserve Bank of India (RBI) on Wednesday projected growth at 6.9% for FY27, underscoring similar concerns over rising global risks.

Delivering a bi-monthly monetary policy statement, RBI Governor Sanjay Malhotra said the economy had shown “strong momentum” in FY26, supported by robust consumption, investment, policy measures and favourable financial conditions.

Real GDP growth for the previous year was estimated at 7.6% under the new GDP series.

However, he flagged emerging headwinds, particularly from elevated energy and commodity prices and disruptions to input supplies linked to tensions in West Asia, including the Strait of Hormuz.

“Going forward, elevated energy and other commodity prices and shocks to availability of inputs due to disruptions in the Strait of Hormuz are likely to impact growth this year,” Malhotra said.

The RBI projected quarterly GDP growth at 6.8% in April–June, 6.7% in July–September, 7.0% in October–December and 7.2% in January–March.