IMF lifts India’s FY27 growth forecast to 7 percent on domestic demand

The International Monetary Fund raised its growth forecast for India to 7 percent for fiscal year 2026-27, up 60 basis points from the 6.4 percent projected in July. The revision appears in the October World Economic Outlook released during the Fund’s annual meetings in Bangkok. The IMF also lifted its FY28 forecast to 7 percent from 6.7 percent.

“India remains among the fastest-growing major economies, with growth in 2026 projected at 7.0 percent,” the Fund said. “This reflects stronger-than-expected momentum, supported by resilient domestic demand and robust services activity.” On a calendar-year basis the projections are 7.4 percent for 2026 and 7 percent for 2027.

The upgrade follows India’s 7.8 percent expansion in the April-June quarter of FY27. That outturn exceeded most private forecasts and prompted earlier revisions by the Reserve Bank of India, the World Bank and the Asian Development Bank. The RBI and World Bank both now see 7.1 percent for FY27. The IMF noted that India’s performance stands out against downward revisions for many other emerging-market economies affected by higher oil prices linked to Middle East conflict.

The Fund pointed to favourable demographic dynamics, a large and expanding domestic market, and continued structural reforms as supporting stronger growth potential. It observed that domestic demand and services had offset the drag from elevated energy prices. In July the IMF had trimmed its India forecast slightly, citing the risk of pass-through from higher crude prices. Subsequent data on consumption and services activity reversed that assessment.

Global growth is projected at 3.1 percent in 2026. The IMF assumes the Strait of Hormuz reopens in March 2027 and that energy markets largely return to pre-conflict conditions by October 2027. It warned that some emerging markets lacking inventories could still face shortages and that debt risks remain elevated. India’s upward revision is one of the clearer positive exceptions in the outlook.

The numbers matter for fiscal planning, investment decisions and monetary policy. A sustained 7 percent path would keep India as the largest contributor to global growth among major economies outside China. The IMF’s text attributes the revision to observable data on demand and services rather than to any single policy announcement. Further quarters of high-frequency indicators will test whether the momentum holds through the remainder of the fiscal year.

Place: Bangkok / New Delhi. Date: 13 October 2026.