State Correspondents
Economy Desk | Global Economic Prospects Report
India Remains Fastest-Growing Major Economy
World Bank projects 6.5% growth despite global headwinds
India’s Growth To Ease To 6.5% In FY27; Inflation Ends Deflation
The World Bank has maintained its growth projection for India at 6.5% for FY26/27, signaling a moderation from the estimated 7.2% expansion in FY25/26, driven by robust domestic demand, tax reforms, and resilient private consumption. Despite potential headwinds from sustained US import tariffs, India continues to lead growth among the world’s largest economies, outpacing global averages significantly.
World Bank Growth Projections
| Fiscal Year | GDP Growth (%) | Key Drivers |
|---|---|---|
| FY25/26 | 7.2% | Private consumption, tax reforms, rural earnings |
| FY26/27 | 6.5% | Services boom, export recovery, investments |
| FY27/28 | 6.6% | Domestic demand offsets trade tariffs |
December 2025 (8-month high)
Inflation (up from 1.33%)
Ends deflation at neutral
Remains deflationary
Separately, India’s Wholesale Price Index (WPI) inflation surged to 0.83% in December 2025 — marking an end to two months of deflation and the highest reading since April. The uptick was primarily driven by manufactured products (weight: 64.23%) rising 1.82% year-on-year, alongside gains in minerals, machinery, food products, and textiles. On a month-on-month basis, WPI jumped 0.71%, reflecting broad-based price pressures across commodities.
Global Context & India’s Resilience
While global growth is expected to ease to 2.6% in 2026 amid trade tensions and tariff escalations, India’s outlook benefits from strong services exports, merchandise export resilience, and rural demand recovery. The World Bank notes that potential AI adoption and trade dispute resolutions could provide additional upside, positioning India as the fastest-growing major economy through FY28.
