The World Bank has upgraded its projection for India’s economic growth to 6.6% in FY2026, citing strong domestic consumption, export resilience, and supportive trade agreements, despite external risks.
The World Bank has lifted its forecast for India’s economic growth in the current financial year, pointing to firm domestic demand, resilient exports and trade deals that are helping to offset a weaker global backdrop. The revised outlook underscores India’s position as South Asia’s main growth engine.
According to the World Bank, India’s economy is now expected to expand by 6.6% in FY2026, up from an earlier estimate of 6.3%. The bank said private consumption has remained a key support, helped by relatively low inflation and changes to Goods and Services Tax rates that have eased pressure on households. It also said recent trade agreements, including pacts involving the UK and the European Union, should lend further support to activity.
The World Bank’s assessment comes after a series of upward revisions to its India outlook this year. In January, reports including NDTV and Business Standard said the lender had raised its FY2025-26 growth estimate to 7.2% on the back of strong domestic demand and firmer household earnings in rural areas. Those reports also noted that services exports had held up well despite higher US tariffs, while merchandise exports rose in November. More recently, NDTV reported that the World Bank had pencilled in 6.6% growth for FY2026-27.
The bank warned, however, that the outlook remains vulnerable to external shocks. Higher energy prices could feed through into inflation and squeeze household spending power, while geopolitical tensions in the Middle East and wider trade disruption could hit both growth and prices. The lender said India’s macroeconomic buffers remain important, but so does diversification in energy, fiscal and trade policy.
For lenders and insurers, the outlook is broadly constructive. Stronger economic activity can support loan growth, consumer credit and business investment, while also increasing demand for health, motor, property and life insurance. But the World Bank’s message was clear: resilience at home will need to be matched by caution on inflation, liquidity and credit risk as global conditions remain unsettled.
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