India to Grow 6.5 PC in FY25, 6.7 PC in FY26, FY27: WB
Chennai: The World Bank has projected that the Indian economy will soften its growth in FY25 to 6.5 per cent, while it has retained the growth for next fiscal at 6.7 per cent. The growth in FY27 as per the January forecast will be 6.7 per cent, lower by 0.1 per cent from the earlier prediction in June. In India, growth is expected to decelerate to 6.5 per cent in FY25 from 8.2 per cent in FY24, reflecting a slowdown in investment and weak manufacturing growth. In its June update, the World Bank had predicted India to grow at 6.6 per cent. However, services activity has been steady, while growth in the agricultural sector has recovered. Private consumption growth has remained resilient, primarily driven by improved rural incomes accompanied by a recovery of agricultural output. In contrast, higher inflation and slower credit growth have curbed consumption in urban areas. Nevertheless, India is projected to maintain the fastest growth rate among the world’s largest economies, at 6.7 per cent in both FY26 and FY27. The services sector is expected to enjoy sustained expansion, and manufacturing activity is anticipated to strengthen, supported by government initiatives to enhance logistics infrastructure and improve the business environment through tax reforms. Private consumption growth is expected to be boosted by a strengthening labour market, expanding credit, and declining inflation. However, government consumption growth is likely to remain contained. Investment growth overall is expected to be steady, with rising private investment, supported by healthy corporate balance sheets and easing financing conditions. “Growth in the South Asian region is expected to rise to 6.2 per cent in 2025 and 2026, supported by the projected firm growth in India, though it will remain below the long-term average over 2000-19,” the report said. The global growth is expected to hold steady at 2.7 per cent in 2025-26. However, the global economy appears to be settling at a low growth rate that will be insufficient to foster sustained economic development with the possibility of further headwinds from heightened policy uncertainty and adverse trade policy shifts, geopolitical tensions, persistent inflation, and climate-related natural disasters, it said. The World Bank also found that inflation in India has stayed within the central bank’s target range since September 2023 except a breach in October 2024, driven by soaring food prices. In India, fiscal deficits are expected to continue shrinking, largely on account of growing tax revenues, it added.
Chennai: The World Bank has projected that the Indian economy will soften its growth in FY25 to 6.5 per cent, while it has retained the growth for next fiscal at 6.7 per cent. The growth in FY27 as per the January forecast will be 6.7 per cent, lower by 0.1 per cent from the earlier prediction in June.
In India, growth is expected to decelerate to 6.5 per cent in FY25 from 8.2 per cent in FY24, reflecting a slowdown in investment and weak manufacturing growth. In its June update, the World Bank had predicted India to grow at 6.6 per cent.
However, services activity has been steady, while growth in the agricultural sector has recovered. Private consumption growth has remained resilient, primarily driven by improved rural incomes accompanied by a recovery of agricultural output. In contrast, higher inflation and slower credit growth have curbed consumption in urban areas.
Nevertheless, India is projected to maintain the fastest growth rate among the world’s largest economies, at 6.7 per cent in both FY26 and FY27. The services sector is expected to enjoy sustained expansion, and manufacturing activity is anticipated to strengthen, supported by government initiatives to enhance logistics infrastructure and improve the business environment through tax reforms.
Private consumption growth is expected to be boosted by a strengthening labour market, expanding credit, and declining inflation. However, government consumption growth is likely to remain contained. Investment growth overall is expected to be steady, with rising private investment, supported by healthy corporate balance sheets and easing financing conditions.
“Growth in the South Asian region is expected to rise to 6.2 per cent in 2025 and 2026, supported by the projected firm growth in India, though it will remain below the long-term average over 2000-19,” the report said.
The global growth is expected to hold steady at 2.7 per cent in 2025-26. However, the global economy appears to be settling at a low growth rate that will be insufficient to foster sustained economic development with the possibility of further headwinds from heightened policy uncertainty and adverse trade policy shifts, geopolitical tensions, persistent inflation, and climate-related natural disasters, it said.
The World Bank also found that inflation in India has stayed within the central bank’s target range since September 2023 except a breach in October 2024, driven by soaring food prices. In India, fiscal deficits are expected to continue shrinking, largely on account of growing tax revenues, it added.
What's Your Reaction?
