The International Monetary Fund (IMF) on Monday raised India’s growth estimate for 2025-26 by 0.7 percentage points to 7.3%, citing stronger-than-expected economic momentum.
In its January 2026 World Economic Outlook Update, the IMF also revised growth estimate upward by 20 bps to 6.4% for 2026-27.
Recently, the World Bank also revised up India’s growth projection by 90 bps to 7.2% for FY26, citing robust domestic demand, strong private consumption, tax reforms and improvements in real household earnings in rural areas. It retained 6.5% projection for FY27.
The National Statistical Office’s (NSO) First Advance Estimate (FAE) pegs real GDP growth at 7.4% and gross value added (GVA) at 7.3% for FY26. The RBI has projected growth to be 7.3% in FY26.
India’s Global Position
The IMF growth upgrade for India reinforces the country’s position as the fastest-growing major economy amid a steady but uneven global recovery.
The upgrade reflects robust domestic demand, resilient services activity and sustained public capital expenditure, which helped offset global headwinds from trade uncertainty and slowing external demand.
Looking ahead, the Fund expects India’s growth to moderate to 6.4% in both 2026 and 2027 as cyclical and temporary tailwinds fade.
Even so, this pace remains well above the global average and significantly stronger than that of most emerging market peers. The IMF noted that India continues to benefit from macroeconomic stability, improving infrastructure and reforms that support investment and productivity over the medium term.
Positive Inflation Trends
Inflation in India is projected to return close to target levels after easing sharply in 2025, aided by subdued food prices and prudent monetary policy. This provides policymakers with greater room to balance growth support with financial stability.
“Inflation in India is expected to go back to near target levels after a marked decline in 2025, driven by subdued food prices,” the Fund said.
Global growth is projected to stay resilient at about 3.3% in 2026 and 3.2% in 2027, matching 2025, with a slight upward revision for 2026, according to the IMF. Trade-policy headwinds are offset by AI-led investment, supportive fiscal-monetary conditions and private-sector adaptability. Inflation eases steadily. Downside risks dominate, though AI-driven productivity gains could lift growth. Geopolitical, fiscal and financial vulnerabilities remain key concerns globally.