IMF raises India’s FY26 growth forecast to 7.3%, citing strong momentum and easing inflation, while projecting moderate growth in the coming years.
The IMF attributed the upward revision to better-than-expected economic outcomes and sustained momentum toward the end of the fiscal year. (Photo: Social Media)
India’s economic outlook has received a fresh boost after the International Monetary Fund (IMF) raised its growth projection for the country, pointing to stronger-than-expected performance in recent quarters. The upward revision signals confidence in India’s near-term growth momentum even as the global economy continues to face uncertainty.
In its latest World Economic Outlook (WEO) update, the IMF revised India’s growth forecast for the 2025–26 fiscal year (FY26) to 7.3 per cent, an increase of 0.7 percentage points from its October estimate. The multilateral lender also marginally raised its projection for 2026–27 to 6.4 per cent, up from 6.2 per cent earlier.
The IMF attributed the upward revision to better-than-expected economic outcomes and sustained momentum toward the end of the fiscal year.
“In India, growth is revised upward by 0.7 percentage point to 7.3 per cent for 2025 (fiscal FY26), reflecting the better-than-expected outturn in the third quarter of the year and strong momentum in the fourth quarter,” the IMF said.
The Fund noted that robust domestic demand, steady investment activity, and improving consumption trends played a key role in lifting growth prospects.
While the near-term outlook looks strong, the IMF expects India’s growth rate to ease slightly in subsequent years as temporary drivers lose steam.
“Growth is projected to moderate to 6.4 per cent in 2026-27 and 2027-28 as cyclical and temporary factors wane,” it added.
Despite this moderation, India is still expected to remain among the fastest-growing major economies globally, supported by structural reforms, a large domestic market, and expanding manufacturing and services sectors.
Recent government data aligns with the IMF’s optimistic assessment. According to official figures, India’s GDP grew 8 per cent during April–September of FY26, driven by an 8.2 per cent expansion in the July–September quarter.
Separately, the First Advance Estimates released by the Ministry of Statistics and Programme Implementation project the Indian economy to grow by 7.4 per cent in the current fiscal year. In comparison, growth in 2024–25 stood at 6.5 per cent, highlighting a clear acceleration.
The IMF also offered a positive view on inflation, suggesting that price pressures in India are likely to soften further.
Inflation is expected to return closer to target levels after declining in 2025, supported largely by easing food prices. The Reserve Bank of India (RBI) aims to keep consumer price index (CPI) inflation at 4 per cent, with a tolerance band of 2 percentage points on either side.
Lower inflation could give policymakers more flexibility to support growth while maintaining macroeconomic stability.
The IMF’s update provided a steady outlook for the global economy. Global growth is projected at 3.3 per cent in 2026 and 3.2 per cent in 2027.
“The forecast marks a small upward revision for 2026 and no change for 2027 compared with that in the October 2025 WEO,” the report said.
For emerging markets and developing economies, growth is expected to stay just above 4 per cent in both years. China’s growth forecast for 2025 was also revised slightly higher to 5 per cent.
With stronger growth, easing inflation, and improving macroeconomic indicators, India continues to stand out in a slowing global environment. While challenges remain, the IMF’s latest assessment underscores confidence in India’s economic resilience and medium-term potential.
