World Bank Increases GDP Estimate to 6.5% for 2025-26

The World Bank has raised its forecast for India's Gross Domestic Product (GDP) growth rate to 6.5% for the current fiscal year 2025-26.

In its June forecast, the World Bank had projected it at 6.3%.In its South Asia scenario released on Tuesday, the World Bank stated that due to sustained strength in consumption growth, India is expected to remain the world's fastest-growing major economy.

However, the World Bank has warned that 50% US tariffs imposed on Indian exports could impact the country's economy next year. The World Bank said that the Indian economy will grow at a rate of 6.5% in the current fiscal year 2025-26.

Previously, it had projected 6.3% for this period. Additionally, the GDP growth forecast for the fiscal year 2026-27 has been reduced from 6.7% to 6.5%. Furthermore, it has projected a growth rate of 6.3% for the fiscal year 2027-28.

In its South Asia scenario, the World Bank noted that domestic conditions, particularly agricultural production and rural wage growth, have been better than expected. Government reforms in Goods and Services Tax (GST), such as reducing the number of tax slabs and simplifying compliance, are expected to boost activities.

The World Bank has projected that South Asia's growth rate could reach 6.6% in 2025, but it may decline to 5.8% in 2026, including the impact of US tariffs on India.

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