The World Bank has raised its growth forecast for India from 6.3% to 6.6% for the current financial year, citing strong domestic demand and recent free trade agreements. The World Bank expects India to remain the primary engine of economic growth in South Asia.

According to the report, India’s economic growth is estimated to have accelerated from 7.1% in Financial Year 2025 to 7.6% in Financial Year 2026, supported by strong domestic demand and resilient exports. Private consumption was particularly strong, helped by low inflation and the rationalisation of Goods and Services Tax (GST) rates.

The report said the reduction in GST rates is expected to continue supporting consumer demand during the first half of Financial Year 2027. However, elevated global energy prices could put upward pressure on inflation and reduce households’ disposable income.

In its twice-yearly regional economic outlook, the World Bank said South Asia’s growth prospects are being driven largely by India’s strong performance. Robust domestic demand, tariff reductions and recent trade agreements—including free trade agreements with the UK and the European Union—are expected to support the region’s economic momentum.

World Bank Vice President for South Asia Johannes Zutt said that despite a challenging global environment, South Asia’s growth prospects remain strong.