India’s economy is expected to grow faster in FY26 than previously estimated, with the International Monetary Fund (IMF) revising its growth forecast to 6.6 percent from 6.4 percent projected in July, according to its October World Economic Outlook released on Tuesday.
“In India, growth is projected to be 6.6 percent in 2025 and 6.2 percent in 2026… This is an upward revision for 2025, with carryover from a strong first quarter more than offsetting the increase in the US effective tariff rate on imports from India since July, and a downward revision for 2026,” the IMF said.
Strong Q1 Momentum Lifts Outlook
India’s economy expanded 7.8 percent in the first quarter of FY26—the fastest pace in over a year—and is likely to log around 7 percent growth in the second quarter as well.
The IMF attributed the upward revision to resilient domestic demand, robust service exports, and the carryover effect from the strong start to the fiscal year.
The IMF’s revision follows similar upgrades by other institutions. The World Bank last week raised its FY26 forecast to 6.5 percent from 6.3 percent, citing solid consumption and GST reforms. The Reserve Bank of India (RBI) has also revised its projection upward to 6.8 percent, from 6.5 percent a month earlier.
Inflation Forecast Eased Sharply
The IMF cut India’s FY26 inflation forecast to 2.8 percent, sharply lower than 4.2 percent projected in April.
“By contrast, inflation in India, Malaysia, the Philippines, and Thailand surprised on the downside,” IMF said.
For FY27, it now expects inflation at 4 percent, marginally below its earlier 4.1 percent estimate.
India’s retail inflation, meanwhile, fell to an eight-year low of 1.54 percent in August, down from 2.1 percent in July, and stayed below 2 percent for a second straight month in September—underscoring a broad-based price moderation.
India remains the world’s fastest-growing major economy, outpacing peers even amid global trade uncertainties and policy tightening cycles.
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