New Delhi: The World Bank, on Tuesday, raised India’s GDP growth forecast for the current fiscal to 7.1 per cent, up 0.5 percentage points from its April projections, driven by better-than-expected print for the first quarter.
“We have upgraded our FY27 growth forecast to 7.1 per cent from 6.6 percent in April, as growth has held up better than expected despite trade and geopolitical uncertainties,” the World Bank said in its latest India Development Update, as reported by PTI.
The favourable policy and credit environment outweighed trade tensions and India’s growth accelerated to 7.8 per cent in FY26 from 7.2 per cent in FY25. This was driven by strong investment and solid private consumption.
The World Bank report said rural consumption initially outpaced urban demand supported by strong agricultural performance, rural income support, food subsidies, and low inflation, while urban consumption strengthened later in the year following income-tax relief and GST cuts.
With GDP growing 7.8 per cent in Q1, the momentum has carried into FY27. This is above expectations and will moderate in subsequent quarters, it said.
The World Bank said that private consumption is expected to remain the main driver of growth though a rainfall deficit through August is likely to weigh modestly on rural demand, while subdued government consumption will stay muted.
The investment outlook is broadly unchanged, with heightened global uncertainty weighing on private investment as frontloading fades, partly offset by supportive financial and policy conditions, including stronger public investment.
India’s exports have performed better than expected and are likely to provide the main upside to the FY27 growth outlook relative to the April forecasts.
Industry is now forecast to perform better than initially expected on the supply side and offset a weaker agricultural outlook. Since April, industrial activity has exceeded expectations despite global headwinds.
This partially reflects the stronger-than-expected front-loading earlier in the year, with infrastructure and construction goods growth accelerating to 7 2 per cent in Q1 from 6.1 per cent last year, as well as the higher summer utility demand, which drove the electricity sector to expand by 9.3 per cent in Q1 compared to a 1.5 per cent contraction last year.
The report stated that although above-average rainfall since July narrowed the monsoon deficit, the overall rainfall shortage during southwest monsoon has weakened agricultural prospects.
The services sector growth remained elevated despite a slowdown from the high base in FY26, the World Bank said.
