The World Bank has raised India’s economic growth forecast for 2025-26 to 6.5%, reflecting stronger domestic demand and the positive effects of recent Goods and Services Tax (GST) reforms. However, the growth outlook for 2026-27 has been revised downward to 6.3%, as higher U.S. tariffs on Indian exports are expected to weigh on trade performance.
India’s economy expanded by 7.8% in the April–June 2025 quarter, driven by robust private consumption, investment, and lower-than-expected inflation. Improved agricultural output and rising rural wages further supported demand. The government’s streamlined GST framework—simplifying tax brackets and easing compliance—has boosted business confidence and formalisation.
However, external headwinds loom large. The United States’ 50% tariff on nearly 75% of Indian exports is likely to impact export competitiveness and slow growth momentum in the following year.
Despite these challenges, India is expected to remain the world’s fastest-growing major economy, supported by strong domestic fundamentals, ongoing structural reforms, and a resilient consumption base. Experts note that continued policy focus on rural development, income growth, and export diversification will be key to sustaining this momentum.
