New Delhi, Oct. 14: The International Monetary Fund (IMF) has raised India’s economic growth forecast for the financial year 2026-27 to 7 per cent from its earlier estimate of 6.4 per cent, highlighting the country’s strong domestic demand, expanding services sector and sustained economic momentum.
The revised projection places India among the fastest growing major economies at a time when global markets continue to face uncertainty over energy prices, trade tensions and financial conditions.
In an update to its flagship World Economic Outlook report, the IMF attributed the upward revision to stronger-than-expected economic activity and improving growth prospects. It also highlighted India’s favourable demographic trends, expanding domestic market and ongoing structural reforms as important factors supporting long-term expansion.
The revised assessment follows the Reserve Bank of India’s recent decision to increase its GDP growth estimate to 7.1 per cent for the current financial year, reflecting confidence in the country’s economic resilience.
Union Commerce and Industry Minister Piyush Goyal welcomed the IMF’s projection, saying India’s expanding network of Free Trade Agreements (FTAs) could further strengthen international trade, encourage economic activity and help build more resilient supply chains.
In a social media post on Tuesday, Goyal described the forecast as a sign of India’s economic strength and credited the government’s trade initiatives under Prime Minister Narendra Modi with creating opportunities for deeper global economic engagement.
However, the improved growth outlook comes with several challenges. Rising international oil prices could increase import costs, intensify inflationary pressures and affect India’s external balances. The country remains particularly exposed to energy-market fluctuations because of its dependence on imported crude oil.
The IMF expects India’s consumer inflation to rise to 5 per cent in FY27, compared with 2 per cent in FY26, before easing to 4.4 per cent in FY28. Meanwhile, retail inflation reportedly reached 5.5 per cent in September, its highest level under the new consumer price index series.
The country’s current account deficit is also projected to widen to 1.5 per cent of GDP in FY27, compared with 0.7 per cent in FY26. The deficit is expected to narrow to 1.3 per cent in FY28, according to the projections.
At the global level, the IMF estimates worldwide economic growth at 3.1 per cent in 2026, marginally higher than its previous forecast of 3 per cent. The projection for 2027 remains unchanged at 3.4 per cent.
The latest outlook also reflects improved expectations for several advanced economies. Germany’s growth forecast for 2026 has been raised to 1.3 per cent from 0.7 per cent in July, while the United Kingdom’s projection has increased to 1.3 per cent from 1 per cent.
China’s economic expansion, meanwhile, is expected to moderate. After recording 5 per cent growth in 2025, the world’s second-largest economy is projected to expand by 4.5 per cent in 2026 and 4 per cent in 2027.
The IMF has also revised its forecast for advanced economies collectively, projecting growth of 2.1 per cent in 2026, compared with its earlier estimate of 1.7 per cent.
Despite the improved global assessment, economic risks remain significant. Further disruptions to oil supplies, renewed trade disputes and tighter financial conditions could undermine growth in several regions.
For India, maintaining the current pace of expansion will depend on sustaining domestic consumption, strengthening investment, expanding manufacturing and services, and managing the impact of higher energy costs.
The latest IMF projection reinforces India’s position as a major driver of global economic growth. However, controlling inflation, maintaining external stability and ensuring that economic gains translate into broader employment and income opportunities will remain important priorities in the coming years.