New Delhi
The World Bank on Wednesday revised its growth forecast for India, cutting it by 4 percentage points to 6.3% for the current fiscal year. This adjustment follows global economic weakness and growing policy uncertainty. Earlier, the World Bank had estimated a growth rate of 6.7% for FY 2025-26.
In its biannual regional outlook, the World Bank attributed the lower forecast to slower-than-expected growth in private investment and public capital expenditure. The Indian economy in FY 2024/25 has not performed as anticipated, with government targets for public investment falling short. The bank also noted that the benefits of monetary easing and regulatory reforms for private investment are being overshadowed by global economic challenges.
The International Monetary Fund (IMF) also recently lowered India’s GDP growth forecast to 6.2% for the current fiscal, from its earlier estimate of 6.5%.
The World Bank highlighted that while private consumption is expected to rise due to tax cuts, the country's export demand will face constraints due to shifts in global trade policies and slowing international growth. Additionally, South Asia’s growth prospects have weakened overall, with projections for many countries, including India, being downgraded.
In its South Asia Development Update, the World Bank emphasized the importance of strengthening domestic revenue mobilization to address fiscal vulnerabilities in the region. The outlook remains uncertain, with risks from global factors, including political instability, inflation, and natural disasters, impacting economic recovery and growth across the region.
The report also discussed other South Asian economies, such as Bangladesh, Pakistan, and Sri Lanka, forecasting modest growth amid various challenges.