International Monetary Fund (IMF) on Tuesday upped India’s growth forecast by 30 basis points to 6.5 per cent for fiscal year 2026-27 (FY27). However, global forecast has been revised downward by 20 bps to 3.1 per cent for 2026.

“For 2026 (Fiscal Year 2026-27), growth is revised upward moderately by 0.3 percentage point (0.1 percentage point relative to January) to 6.5 per cent, led by positive contributions from the carryover of the strong 2025 out-turn and the decline in additional US tariffs on Indian goods from 50 per cent to 10 per cent, which outweigh the adverse impact of the West Asia conflict,” IMF said in its latest edition of World Economic Outlook. This is second upward revision for Indian economy after World Bank increased the estimates by 30 basis points to 6.6 per cent.

Further, IMF said that growth for 2025 (Fiscal Year 2025-26) is revised upward by 1 percentage point relative to October, to 7.6 per cent, reflecting the better-than-expected out-turn in the second and third quarters of the fiscal year and sustained strong momentum in the fourth quarter. “Growth is projected to stay at 6.5 per cent in 2027 (Fiscal Year 2027-28),” it said, while adding that in several South and South-East Asian economies, disruptions in West Asia are expected to reduce tourism and remittance inflows, thereby weakening domestic demand.

On inflation, the multilateral body said that it is expected to return to near-target levels after subdued food prices drove a marked decline in 2025 (2025-26). This is in line with the RBI’s projection. Average retail inflation in FY26 slowed to 2.1 per cent from 4.6 per cent of FY25. In its recent policy announcement, the RBI said that the ongoing conflict has led to large volatility in international energy and other commodity prices imparting considerable uncertainty to the near-term inflation outlook. The pass-through of higher global energy prices has resulted in price increases in select fuels such as premium petrol and LPG and diesel for industrial use.

On the other hand, the near-term food supply prospects have been boosted by robust rabi crop providing some comfort. Considering all these factors, CPI inflation for 2026-27 is projected to be at 4.6 per cent. Persistently-elevated energy prices due to the West Asia conflict and possible El Niño conditions (which could have a negative impact on South-West monsoon) pose upside risks to inflation. “Core inflation is projected at 4.4 per cent for 2026-27 and, excluding precious metals, it is even lower indicating that underlying inflation pressures are expected to remain contained,” the RBI said.

Global growth

According to IMF, global growth is projected to be 3.1 per cent in 2026 and 3.2 per cent in 2027, slower than its recent pace of about 3.4 per cent in 2024-25, and to settle at about that rate in the medium term, slower than its historical (2000-19) average of 3.7 per cent.

“The forecast for 2026 is revised downward by 0.2 percentage point and that for 2027 is unchanged, compared with that in the January 2026 WEO Update,” IMF said, while adding that global headline inflation is expected to increase to 4.4 per cent in 2026 and decline to 3.7 per cent in 2027, marking upward revisions for both years.

Published on April 14, 2026