IMF raises India’s FY27 GDP forecast by 10 bps to 6.5%

New Delhi

The International Monetary Fund (IMF) has raised its forecast for India's GDP growth in the current financial year started April 1 by 10 basis points to 6.5%, citing continued momentum from FY26 and lower US tariffs. The reduction in US tariffs on Indian goods to 10% from 50% will outweigh the adverse impact of the war in West Asia, the IMF said in the April edition of its World Economic Outlook report.

The fund also raised India's growth forecast for FY28 by 10 bps to 6.5%. The Indian economy grew 7.8% in the December quarter and is projected to grow 7.6% in FY26, according to the government's second advance estimate. Earlier this month, the World Bank also raised its forecast for India's GDP growth in FY27 by 10 basis points to 6.6%. Both the IMF and the World Bank projections for India's growth in FY27 are lower than the RBI forecast of 6.9%.

The IMF expects inflation to rise to the RBI medium-term target of 4% in FY27 after subdued food prices drove a marked decline in FY26. It sees CPI inflation rising to 4.7% this year from 2.1% in FY26. Inflation is then expected to ease to 4% in FY28. CPI inflation rose to a 12-month high of 3.4% in March, while the RBI projects inflation to average 4.6% in FY27. India's current account deficit is projected to widen to 2% of GDP in FY27 from an estimated 0.9% in FY26, before moderating to 1.6% in FY28, as per the IMF.

IMF cuts the outlook for global growth

The Iran war has stalled the world's economic momentum this year, likely pushing growth lower compared to 2025, the IMF warned Tuesday. The IMF downgraded its forecast for global growth to 3.1% in 2026 from the 3.3% it had forecast back in January. The expected growth would mark a deceleration from a 3.4% expansion in 2025. Due to the US-Iran conflict, the IMF marked up its expectation for global inflation this year to 4.4% from 4.1% in 2025 and from the 3.8% it had forecast for this year in January. The IMF's forecast assumes that conflict in the Persian Gulf is short-lived and that energy prices rise "a moderate 19%'' this year.