By Sarah Johnson, Economic Correspondent
Updated: June 19, 2025
Key Takeaways
- 6.7% Growth Forecast: The World Bank’s January 2025 Global Economic Prospects (GEP) report forecasts India’s GDP to expand by 6.7% in fiscal years 2025/26 and 2026/27 ddnews.gov.in.
- Fastest‑Growing Major Economy: This pace keeps India ahead of all other large economies, with global growth pegged at just 2.7% in the same period m.economictimes.com.
- Drivers: Robust private consumption, continued infrastructure spending, and a pickup in manufacturing investment underpin the outlook.
- Risks: Slowing global trade, tighter financial conditions, and monsoon variability could introduce near‑term headwinds.
1. What the World Bank Says
In its Global Economic Prospects report released January 2025, the World Bank highlights that:
“India is set to remain the fastest‑growing major economy, with GDP growth forecast at 6.7% in both FY26 and FY27, supported by resilient private consumption and increased public and private investment.” m.economictimes.com
The report draws on data from India’s Ministry of Statistics and Programme Implementation (MOSPI) and the Reserve Bank of India (RBI), projecting a gradual decline in inflation to around 5% by mid‑2026 and modest current‑account deficits of 1–1.6% of GDP through FY27 worldbank.org.
2. Expert Analysis
Dr. Arvind Panagariya, professor of economics at Columbia University (profile: columbia.edu/…/panagariya), notes:
“A sustained 6.7% growth rate reflects India’s demographic dividend and structural reforms. Continued capital expenditure and ease‑of‑doing‑business improvements are critical to sustaining this trajectory.”
3. 5 Key Drivers
- Private Consumption: Rising urban incomes and credit penetration.
- Infrastructure Spending: Government capex outlays up 15% year‑on‑year.
- Manufacturing Investment: ‘Make in India’ incentives boosting factory creation.
- Services Exports: IT and business‑process services to grow 8% annually.
- Monetary Policy: RBI’s calibrated rate cuts supporting credit growth.
4. What Happens Next?
- Q3 FY26 GDP Data (Aug 2025): Market watchers will keenly track real‑time indicators (PMI, auto sales).
- Monsoon Update (July 2025): El Niño concerns could affect agricultural output.
- Global Headwinds: US Fed policy shifts and trade tensions remain upside risks.
5. Daily Digest
- June 18, 2025: RBI keeps repo rate unchanged at 6.5%.
- June 17, 2025: India’s merchandise exports up 13% YoY in May.
- June 16, 2025: IMF raises South Asia growth outlook to 6.2%.
