IMF Raises India's FY27 and FY28 Growth Forecasts to 7 Per Cent

The International Monetary Fund raised its growth forecast for India to 7 per cent for both the current fiscal year (FY27) and FY28 in its October World Economic Outlook. The revision lifts the FY27 figure by 60 basis points from the 6.4 per cent projected in July and the FY28 figure by 30 basis points from 6.7 per cent.

The Fund stated that India remains among the fastest-growing major economies. It attributed the upgrade to stronger-than-expected momentum supported by resilient domestic demand and robust services activity, even as higher oil prices linked to the Middle East conflict weigh on other importers. On a calendar-year basis the IMF projects 7.4 per cent growth in 2026 and 7 per cent in 2027. India’s economy expanded 7.8 per cent in the April–June quarter of FY27, exceeding most forecasts.

The upgrade aligns with recent revisions by other institutions. The Reserve Bank of India and the World Bank both raised their FY27 projections to 7.1 per cent. The Asian Development Bank moved to 7 per cent. The OECD had earlier lifted its outlook by 80 basis points to 7.1 per cent. The IMF’s July forecast had been a slight downgrade from its April figure; the October reversal reflects the stronger outturn in the first quarter and continued strength in private consumption and services.

Global growth is now projected at 3.1 per cent for 2026, up from the July estimate of 3 per cent but still below the 3.5 per cent recorded last year. The Fund noted that AI-related investment is offsetting some of the drag from energy prices and geopolitical disruption. For emerging markets as a group, growth is expected to slow from 4.5 per cent in 2025 to 3.7 per cent in 2026 before recovering. India’s upward revision therefore stands out against a broader pattern of downgrades for energy-importing economies.

The IMF’s baseline assumes the Strait of Hormuz reopens in March 2027 and that conditions broadly return to pre-conflict levels by October 2027. Energy prices are expected to remain above pre-war levels in the interim. India’s large domestic market and favourable demographics are cited as structural supports that allow it to absorb higher import costs more readily than smaller oil importers.

Inflation forecasts for India remain at 4.7 per cent for 2026 and were raised to 4.1 per cent for 2027. The growth upgrade does not alter the Fund’s assessment of medium-term risks, including elevated public debt in many economies and the potential for disorderly moves in bond yields if inflation reaccelerates. For India the immediate implication is confirmation that the post-pandemic recovery has carried more momentum into the current fiscal year than earlier models anticipated.

The figures will feed into the Union Budget process and into assessments by rating agencies and foreign investors. Whether the 7 per cent pace is sustained will depend on the trajectory of oil prices, the continuation of private-capex recovery, and the absence of major external shocks. The IMF’s revision brings its view into closer alignment with the Reserve Bank and the World Bank, reducing one source of divergence in official projections for the Indian economy.