Virendra Pandit
New Delhi: Amid Trump tariff uncertainties, the International Monetary Fund has upgraded India’s growth forecast by 20 basis points for the current fiscal and 10 basis points for the next fiscal years, the media reported on Wednesday.
This is lower than the RBI projection (6.5 percent) but within the range of growth forecast by the Economic Survey (6.3-6.8 percent) for FY26.
“In India, growth is projected to be 6.4 percent in 2025 (FY25-26) and 2026 (FY26-27), with both numbers revised slightly upward, reflecting a more benign external environment than assumed in the April reference forecast,” the global lender said in its update on World Economic Outlook.
In April, the multilateral agency had lowered forecast for FY26 by 30 basis points to 6.2 percent and 20 basis points to 6.3 percent for FY27. Despite the upgrade, growth projection is still lower than January’s forecast.
On July 23, Asian Development Bank (ADB) and India Ratings & Research (Ind-Ra) lowered India’s growth forecast for FY26 by 20 and 30 basis points, respectively. While ADB estimated growth at 6.5 percent, Ind-Ra projected it at 6.3 percent.
The ADB cited the impact of US baseline tariffs and associated policy uncertainty for revising growth forecast. Ind-Ra too listed the uncertain global scenario from the unilateral tariff hikes by the US for all countries and weaker-than-expected investment climate as headwinds might impact growth.
On Monday, in its monthly economic review, the Finance Ministry said the first quarter of FY26 presented a picture of resilient domestic supply and demand fundamentals. With inflation remaining within the target range and monsoon progress on track, the domestic economy enters the second quarter of FY26 on a relatively firm footing.
About the global economy, the IMF update said that growth is projected at 3.0 percent for 2025 and 3.1 percent for 2026. The forecast for 2025 is 0.2 percentage point higher than the one in the reference forecast of the April 2025 World Economic Outlook (WEO) and 0.1 percentage point higher for 2026.
“This reflects stronger-than-expected front-loading in anticipation of higher tariffs; lower average effective US tariff rates than announced in April; an improvement in financial conditions, including due to a weaker US dollar; and fiscal expansion in some major jurisdictions.”
On inflation, it said that global headline number is expected to fall to 4.2 percent in 2025 and 3.6 percent in 2026, a path similar to the one projected in April. The overall picture hides notable cross-country differences, with forecasts predicting inflation will remain above target in the US and be more subdued in other large economies.