Key Points
- IMF forecasts 6.4 per cent expansion in FY2026/27
- Reuters poll places growth at 6.6 per cent
- Oil prices and weak investment remain key risks
ISLAMABAD: India’s economic growth is set to slow markedly in the current fiscal year, with major international institutions forecasting it between 6.3 per cent and 6.6 per cent due to elevated oil prices, weak private investment and global uncertainty.
The Organisation for Economic Co-operation and Development (OECD) has issued the most cautious outlook, projecting India’s gross domestic product (GDP) growth at 6.3 per cent in fiscal year 2026/27. The revised forecast is down from an estimated 7.7 per cent in the previous year.
The Paris-based organisation warned that higher energy costs, inflationary pressures and subdued private investment could constrain economic activity, according to the OECD Economic Outlook for India
The International Monetary Fund (IMF) expects growth to moderate to 6.4 per cent in FY2026/27, citing risks from higher oil prices following tensions in the Middle East and the possibility of a weaker monsoon season.
The fund projects a modest recovery to 6.7 per cent in the following fiscal year, according to the IMF World Economic Outlook Updates.
A Reuters poll of 42 economists published on Tuesday placed India’s growth at 6.6 per cent this fiscal year and 6.8 per cent in FY2027/28.
The survey reflected concerns that businesses remain hesitant to undertake large capital expenditures amid an uncertain global environment. Reuters noted that economists expect investment activity to remain below recent trends.
India’s vulnerabilities to oil shock
India imports nearly 80 per cent of its crude oil requirements, leaving it vulnerable to sustained increases in energy prices.
Oil markets experienced significant volatility earlier this year during the conflict involving Iran, raising concerns about inflation, the current account deficit and pressure on the Indian rupee.
The Asian Development Bank (ADB) is relatively more optimistic, maintaining a 6.6 per cent growth forecast for 2026. The Asian Development Bank India Economy Outlook expects expansion to accelerate to 7.3 per cent in 2027 as domestic demand and public investment remain supportive,
Meanwhile, the United Nations Department of Economic and Social Affairs (UN DESA) projects 6.6 per cent growth in calendar year 2026. UN DESA India Growth Report highlights India’s resilient consumer spending and ongoing infrastructure development.
The forecasts reflect a consensus that India’s economy will remain the world’s fastest-growing economy, albeit at a slower pace than in recent years.
Economists say a sustained recovery in private investment, stable energy prices and favourable weather conditions will be crucial if New Delhi hopes to return to growth rates approaching 7 per cent over the medium term.
