India’s economy is projected to grow at 6.6 percent in FY27, according to the World Bank’s latest India Development Update, even as higher global energy prices driven by the Middle East conflict and ongoing supply chain disruptions weigh on economic activity. Despite the moderation, India is expected to remain one of the fastest-growing major economies in the world, supported by strong macroeconomic fundamentals and policy buffers such as high foreign exchange reserves, low inflation, a stable financial system, predominantly rupee-denominated public debt, and efforts to diversify trade.
The report notes that while external risks remain elevated, India’s economic resilience is helping cushion the impact of global shocks. However, sustaining long-term growth will require stronger private sector-led expansion and improved job creation, particularly for young workers. The World Bank emphasizes the need for a more predictable and business-friendly environment to attract investment and drive employment across key sectors including energy, infrastructure, manufacturing, tourism, healthcare, and agribusiness.
The broader South Asia region is also expected to experience slower growth of 6.3 percent in 2026, down from 7 percent in 2025, before recovering to 6.9 percent in 2027. The report highlights that while countries in the region increasingly use industrial policy to shape economic development, results have been mixed due to constraints such as limited fiscal space and implementation capacity. It recommends combining targeted industrial strategies with broad structural reforms to strengthen productivity, improve competitiveness, and support long-term job creation across South Asia.
