World Bank Cuts India’s Growth Forecast at 6.3% for FY26

The World Bank on Wednesday, April 23, slashed India’s FY26 growth by 4 percentage points to 6.3% on the back of global economic weakness and policy uncertainty.

As per the previous estimate, the World Bank estimated India’s growth at 6.7% for the fiscal year 2025-26.

The World Bank said that growth in India during FY24/25 took a hit due to slower private investment and public capital expenditures.

“In India, growth is expected to slow from 6.5% in FY24/25 to 6.3% as in FY25/26 as the benefits to private investment from monetary easing and regulatory streamlining are expected to be offset by global economic weakness and policy uncertainty,” said its South Asia Development Update, Taxing Times.

The International Monetary Fund (IMF) also slashed India’s GDP forecast for the current fiscal to 6.2% from its January estimate of 6.5%.

“Private consumption is expected to benefit from tax cuts, and the improving implementation of public investment plans should boost government investment, but export demand will be constrained by shifts in trade policy and slowing global growth,” it said.

Additionally, South Asia’s growth prospects have dampened as projections remained weak in most countries in the region.

Regional growth is also expected to slow to 5.8% in 2025, 0.4 percentage points below October projections before ticking up to 6.1% in 2026.

The report also factors in heightened risks, including a highly uncertain global landscape, coupled with domestic vulnerabilities, including constrained fiscal space.

“Although tax rates in South Asia are often above the average in developing economies, most tax revenues are lower. On average during 2019-23, government revenues in South Asia totalled 18% of GDP, below the 24% of GDP average for other developing economies,” it said.