New Delhi, Apr 8 (PTI): The World Bank on Wednesday marginally raised India's growth projections for the 2026-27 fiscal to 6.6 per cent and said although GST rate cuts would boost consumer demands in the initial months of the fiscal, but headwinds from the Middle-East crisis could dent growth.
The FY'27 projection compares with 6.9 per cent estimated by the Reserve Bank of India (RBI), 6.1 per cent by the OECD and 6 per cent by Moody's Ratings.
In its South Asia Economic Update report, the World Bank said India's growth is estimated to have accelerated from 7.1 per cent in FY'25 to 7.6 per cent in FY'26 (April 2025 to March 2026), owing to strong domestic demand and export resilience.
Private consumption growth is particularly robust, supported by low inflation and rationalisation of the Goods and Services Tax (GST).
"Growth is projected to decelerate to 6.6 per cent in FY27, reflecting headwinds from the Middle East conflict," the World Bank said.
Although the reduction in GST rates should continue to support consumer demand in the first half of FY'27, elevated global energy prices are expected to put upward pressure on prices and constrain households' disposable income, it added.
Government consumption growth is expected to soften to onset higher subsidy outlays for cooking fuel and fertilisers. Investment growth is likely to moderate amid elevated uncertainty and rising input costs, the World Bank said.
Improved access to the United States and the European Union (EU) for India's exports will be undermined by slower growth in major trading partners, it added.
The World Bank, in its Global Economic Prospects report in January, had projected India to grow at a rate of 6.5 per cent in 2026-27.
The World Bank said the impact of the Middle-East crisis is highly uncertain and other forecasters have revised down their growth projections to a range between 5.9 and 6.7 per cent for FY'27.
On February 28, the US and Israel launched military strikes against Iran, triggering sweeping retaliation from Tehran.
On April 8, Iran, the US and Israel agreed on a two-week ceasefire in the war that tore across the Middle East and disrupted the global energy market. PTI JD RC
(This story is published as part of the auto-generated syndicate wire feed. No editing has been done in the headline or the body by ABP Live.)
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