World Bank Lowers India's Growth Forecast for FY26

The World Bank has revised India's economic growth forecast for the fiscal year beginning April 1, 2025, lowering it from 6.7% to 6.3%. This adjustment is attributed to prevailing uncertainties in the global economy that are negatively impacting private investment and regional economic prospects across South Asia.

According to the South Asia Development Update report, the benefits to private investment from monetary easing and regulatory reforms are expected to be offset by global economic weakness and policy uncertainty. The report also notes that export demand will remain subdued due to changes in trade policies and sluggish global growth.

However, the report highlights that tax cuts are expected to boost private consumption, and improved implementation of public-private plans should encourage government investment. The equity market in India has grown rapidly in recent years, attracting significant capital, although volatility and net supply remain prevalent.

Martin Raiser, Vice President for South Asia at the World Bank, emphasized that the region's countries have limited resources to cope with the increasing global challenges. He pointed out that South Asia faces risks due to weak fiscal positions, underdeveloped agricultural sectors, and climate-related shocks, necessitating targeted reforms to address these issues.