IMF Raises India’s GDP Growth to 6.5% for FY27, Inflation Projected at 4.7%

The International Monetary Fund (IMF) has revised India’s GDP growth forecast to 6.5% for FY27, slightly higher than its earlier estimate of 6.4%, despite ongoing global uncertainties and geopolitical tensions.

The upward revision reflects strong domestic momentum and improving global trade conditions, even as inflation pressures are expected to rise.

Why Has the IMF Increased India’s Growth Forecast?

The revision is driven by multiple positive factors supporting the economy.

• Strong carryover effect from 2025 growth
• Lower US tariffs on Indian goods (reduced from 50% to 10%)
• Stable domestic demand and services sector strength

These factors have helped offset the impact of external risks, particularly from the Middle East crisis.

How Does India Compare with Global Growth Trends?

India continues to outperform most major economies.

While India is projected to expand at 6.5% in FY27, global growth is expected to moderate to 3.1%, down from 3.4% in 2025. This gap highlights India’s relative resilience amid a slowing global environment.

What Is the Outlook for India’s Inflation?

Inflation is expected to rise significantly in the near term.

Inflation projected at 4.7% in FY27, up from 2.1% in FY26 and expected to ease towards the 4% target by FY28

The increase reflects normalisation from lower levels, as well as global price pressures.

What Is the Government’s Growth Estimate?

The Indian government remains more optimistic about near-term growth.

• FY26 GDP growth estimated at 7.6%
• Higher than the IMF’s earlier projections

This highlights confidence in domestic demand and ongoing economic activity.

What Is the Global Economic Outlook?

The IMF expects global conditions to remain subdued.

Growth worldwide is projected at 3.1%, with Europe likely to face the most pressure. The US and China are expected to see relatively limited moderation, while the UK may witness a decline of around 0.5 percentage points.

What Are the Key Risks to India’s Growth?

Despite the positive outlook, some risks remain.

• Geopolitical tensions in the Middle East
• Global trade uncertainties
• Rising inflation pressures

These factors could influence future growth momentum if conditions worsen.

Conclusion

India’s economic outlook remains relatively strong in comparison to global trends. The IMF’s revised projection reflects confidence in domestic resilience, even as external uncertainties and rising prices continue to pose challenges.

Source: https://www.moneycontrol.com

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