IMF Raises India Growth Forecast to 7 Percent as UPI Merchant Fees Delayed Until After Diwali

The International Monetary Fund raised its growth forecast for India to 7 percent for fiscal year 2026-27, up from the 6.4 percent projected in its July update. The revision reflects stronger domestic demand and continued expansion in the services sector. At the same time, the National Payments Corporation of India said the planned merchant discount rate on person-to-merchant UPI payments above 2,000 rupees will take effect only after Diwali 2026.

The IMF adjustment places India among the faster-growing major economies in the current outlook. Domestic consumption and services have offset softer external demand in recent quarters. The rupee strengthened to 94.96 against the dollar in the latest session, and Finance Minister Nirmala Sitharaman said the Reserve Bank of India would continue efforts to limit excessive volatility. Equity markets responded positively, with the Sensex rising more than 1,100 points on one recent day and the Nifty closing above 22,700.

The UPI delay affects the digital payments system that processes the majority of small-value retail transactions in India. NPCI had proposed a merchant discount rate on larger person-to-merchant payments to cover processing costs. Merchants and payment firms had raised concerns about the timing. Postponing the charge until after the Diwali festival period avoids disruption during the peak shopping window. The exact post-Diwali start date has not been fixed in public statements.

Opposition parties and civil society groups have continued protests in Delhi over revisions to electoral rolls. Delhi Police detained Cockroach Janta Party leaders Saurav Das and Ashutosh Ranka after they entered the Jantar Mantar area, which authorities had denotified as a designated protest site. The Supreme Court extended the deadline for the Centre to respond to petitions concerning metro and train disruptions linked to the protests until October 15. Leader of Opposition Rahul Gandhi hosted opposition and civil society figures for discussions on the issue.

President Droupadi Murmu appointed new governors for six states, including the transfer of Om Prakash Mathur from Sikkim to Kerala. The Election Commission has launched a nationwide campaign to update voter lists across states and Union Territories. China objected to India's naming of 28 strategic locations in Ladakh; the Ministry of External Affairs rejected the objection and restated that Ladakh is an integral part of India.

These developments sit alongside the growth revision. Faster domestic demand supports the higher IMF number, yet political contention over voter rolls and the timing of payment-system charges show the range of issues that can affect consumer and business confidence. The UPI postponement removes one near-term cost for merchants during the festival season, while the growth upgrade rests on observed activity rather than new policy announcements.

Further details on the precise implementation of the merchant discount rate will determine how quickly digital payment costs rise for larger transactions. The IMF forecast will be tested against actual quarterly data as the fiscal year progresses. Both the payment decision and the growth revision are concrete adjustments that businesses and households can track in the coming weeks.