World Bank raises India’s FY26 growth forecast to 6.5% on strong domestic demand and GST reforms

The World Bank has raised India’s growth forecast to 6.5 per cent for the financial year 2026 from its earlier projection of 6.3 per cent in June, citing resilient domestic demand, strong rural recovery and the positive impact of Goods and Services Tax (GST) reforms.
 
In its latest South Asia Development Update, the World Bank said that India is expected to remain the world’s fastest-growing major economy, underpinned by strong consumption growth. However, it downgraded the country’s growth forecast to 6.3 per cent for the financial year 2027 on the back of the 50 per cent tariff imposed by the US.
 
The World Bank has forecast growth in South Asia to be robust at 6.6 per cent this year; however projected it to slow to 5.8 per cent in 2026, a downward revision of 0.6 percentage points from the April forecast. It added that the region’s prospects faced heightened downside risks from an uncertain global environment, socio-political unrest, and labour market disruptions posed by emerging technology such as artificial intelligence (AI).