The International Monetary Fund (IMF) on Tuesday raised its FY27 growth forecast for India to 7 per cent from the 6.4 per cent estimated in July, citing stronger-than-expected momentum in domestic demand and services activity.
“India remains among the fastest-growing major economies, with growth in 2026 projected at 7.0 percent. This reflects stronger-than-expected momentum, supported by resilient domestic demand and robust services activity,” it added.
The revision in growth forecasts by economic forecasters comes following unexpectedly strong growth of 7.8 per cent in the June quarter of FY27. Recently, the Reserve Bank of India (7.1 per cent), World Bank (7.1 per cent) and Asian Development Bank (7 per cent) also substantially raised their growth forecasts for FY27.
The IMF also raised its forecast for FY28 to 7 per cent from the 6.7 per cent estimated earlier.
“India stands out with upward revisions, reflecting sustained momentum and growing evidence of stronger growth potential supported by favourable demographic dynamics, a large and expanding domestic market, and continued structural reforms,” it added.
While raising its forecast for 2026 by 10 basis points to 3.1 per cent, the multilateral lending organisation said two major transformative forces — geopolitics and technology — are reshaping the global economy, with their short-term impact gradually coming into view and their longer-term impact still largely unknown.
“Headwinds from a prolonged war and persistent geopolitical tensions could revive inflationary pressures, strain fiscal and external positions, and hit energy-importing and low-income countries hardest. At the same time, the current technology tailwind could stop abruptly if expectations about AI-related profits and productivity gains are reassessed, weakening investment and tightening financial conditions,” it said.
However, it maintained that the potential upside should not be dismissed. “The constellation of accommodative financial conditions, robust private sector adjustment, and AI-related investment could carry activity through the war shock and begin to lift productivity,” it added.
The IMF advised policymakers to follow a two-pronged approach. “Contain the immediate risks from inflation, debt, and financial fragility while putting in place the infrastructure, skills, and competitive environment needed for technological transformation to translate into broader and more balanced growth, with the gains distributed more evenly across and within countries,” it added.
