The IMF has raised India’s GDP growth forecast to 6.4%, citing reform momentum, strong consumption, and public investment. India remains the fastest-growing major economy globally. Key drivers include policy reforms, tariff easing, low inflation, and robust infrastructure spending. Global projections also see modest growth improvements.
India has once again reinforced its position as the world’s fastest-growing major economy, as the International Monetary Fund (IMF) revised its growth projections for the country upward in its latest World Economic Outlook (WEO) update, released on Tuesday.
Citing the country’s ongoing “reform momentum” as a key catalyst, the IMF projected India’s gross domestic product (GDP) to grow by 6.4% in the current fiscal year (2025-26), up by 0.2 percentage points from its April estimate. The forecast for the following fiscal year (2026-27) has also been revised upward by 0.1 percentage points to 6.5%.
If measured on a calendar year basis, the IMF projects India’s growth at 6.7% for 2025 and 6.4% for 2026. This reaffirms India’s consistent lead over other major global economies in terms of growth momentum.
According to Deniz Igan, Division Chief in the IMF’s Research Department, the upward revision is attributed to multiple factors. “One of the main drivers of India’s sustained growth is its ongoing reform momentum which is fueling robust consumption and a strong public investment push,” Igan said during a press briefing in Washington.
Another significant contributor to the revised outlook is the suspension of higher US tariff threats, which had previously posed economic uncertainty. Additionally, India’s inflation rates have been revised downward to 3.7% this fiscal and 4.0% next year, aided by declining food prices and stable macroeconomic management.
The IMF also cited a “more benign external environment” than initially projected in April, further contributing to India’s improved economic prospects.
India Stands Out Globally
While India leads the growth chart, the IMF has also raised its global economic growth forecast slightly. The worldwide projection for 2025 now stands at 3.2%, up 0.3% from April, and remains at 3.2% for 2026 with a 0.1% rise.
China, India’s closest competitor in economic expansion among major economies, has had its current year’s growth projection raised by 0.8% to 4.8%, but the forecast for 2026 drops to 4.2% despite a minor 0.2% revision.
The United States is expected to grow by 1.9% this year (up by 0.1%) and 2% in 2026 (up 0.3%), reflecting resilience in domestic demand and financial conditions.
For advanced economies collectively, growth is forecast at 1.5% in 2025 and 1.6% in 2026.
Global Challenges Still Loom
Despite the upward revisions, the IMF report was cautious about potential global headwinds. It warned that a resurgence of tariff hikes, particularly from ongoing trade tensions, could dampen global economic performance.
“A rebound in effective tariff rates could lead to weaker global growth,” the report stated, adding that rising uncertainties and the absence of lasting trade agreements could significantly weigh on global activity.
India’s Reform Priorities Ahead
While India’s growth prospects remain robust, Deniz Igan emphasized that sustaining this momentum requires continued reform and investment. “Priorities would include fostering job creation, reskilling the workforce, and allowing more labor market flexibility,” she noted.
She also highlighted the importance of continued investment in infrastructure and the removal of trade restrictions to enhance competitiveness. Over the medium term, the IMF recommends further steps such as land reforms, improving the education system, extending social safety nets, and reducing bureaucratic red tape.
India’s steady climb in global economic rankings has been supported by strategic government initiatives, infrastructure expansion, and technology-driven reforms, making it an attractive destination for investors and global markets alike.
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As the IMF’s projections signal continued strength, India’s economic trajectory looks promising, with the country firmly positioned as a cornerstone of global growth.
