World Bank cuts India’s GDP forecast to 6.3% for FY26

India’s economic growth forecast for FY2025-26 has been sharply lowered to 6.3% from 6.7%, a 40 basis point cut by the World Bank in its latest economic outlook. The forecast for FY2026-27 has also been trimmed by 20 basis points to 6.5%, signaling growing concerns about the country’s ability to maintain high growth amid mounting global uncertainties.

While India remains one of the fastest-growing major economies, the World Bank’s downward revision reflects a more cautious stance as the global environment turns increasingly unpredictable. From geopolitical tensions and supply chain disruptions to tightening global financial conditions, the report highlights a convergence of risks that are expected to weigh on India’s economic momentum over the next two years.

The forecast for FY2027-28 remains more optimistic at 6.7%, indicating expectations of a gradual economic recovery as global conditions stabilize and domestic reforms take hold.

Global Pressures, Local Challenges

India’s downgraded outlook comes against the backdrop of continued global strain. The war in Eastern Europe, instability in the Middle East, and persistently high interest rates in advanced economies have combined to depress global trade and investment. These external shocks have had knock-on effects for emerging markets, including India, where growth has so far been buoyed by strong public investment and a resilient services sector.

Domestically, high borrowing costs and subdued private consumption have contributed to a more restrained growth environment. While India has shown notable resilience in recent years, the World Bank cautions that its medium-term prospects now hinge on policy responsiveness and the strength of its structural reforms.