IMF revises India growth outlook upwards; pegs FY26 at 7.3%, FY27 at 6.4%

IMF projection for 2026

• IMF raises India's FY26 GDP growth forecast to 7.3%, up 0.7 percentage point
• Growth for FY27 and FY28 projected at 6.4 percent as temporary supports fade
• World Bank also upgraded India's FY26 growth estimate to 7.2 percent

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India’s economy is expected to grow faster than previously anticipated in the current as well as the next fiscal, with the International Monetary Fund (IMF) revising its forecasts upward in its World Economic Outlook released on January 19.

The IMF expects India’s GDP to expand by 7.3 percent in FY26, an upward revision of 0.7 percentage point from its October projection. Growth for FY27 has also been nudged up to 6.4 percent from the earlier estimate of 6.2 percent. The Fund expects growth to settle around 6.4 percent in FY28 as temporary and cyclical supports fade.

“In India, growth is revised upward by 0.7 percentage point to 7.3 percent for 2025, reflecting the better-than-expected outturn in the third quarter of the year and strong momentum in the fourth quarter,” the IMF said. It added that growth is projected to moderate in the following years as the boost from favourable base effects and short-term drivers wanes.

India’s economy surprised on the upside in the first half of the year, expanding at over 8 percent. In its first advance estimates released on January 6, the government pegged FY26 growth at 7.4 percent, broadly in line with the IMF’s revised view.

The IMF upgrade follows a similar reassessment by the World Bank. The Washington-based lender recently raised its FY26 growth estimate for India to 7.2 percent and projected growth of about 6.5 percent thereafter, citing stronger domestic demand and resilience in consumption.

The IMF has also turned more optimistic on the global economy. It revised its 2026 global growth forecast upward to 3.3 percent from 3.1 percent projected in October, matching the pace recorded in 2025.

“This steady performance on the surface results from the balancing of divergent forces,” the IMF said . “Headwinds from shifting trade policies are offset by tailwinds from surging investment related to technology, including artificial intelligence, more so in North America and Asia than in other regions, as well as fiscal and monetary support, broadly accommodative financial conditions, and adaptability of the private sector.”

Among major economies, the IMF now expects the United States to grow 2.4 percent in 2025, up from 2.1 percent earlier. China, while slowing from 5 percent, is projected to grow 4.5 percent, with the Fund raising its 2026 forecast by 0.3 percentage point compared with earlier estimates.