The International Monetary Fund raised its forecast for India's economic growth in fiscal 2026 by 0.7 percentage points to 7.3%, citing strong momentum, but said growth is likely to slow to 6.4% in the following two fiscal years as cyclical factors fade.
The upgrade follows a revision earlier this month by India's National Statistics Office, which raised its estimate for growth to 7.4% in the year ending March 31, above the government's initial projection of 6.3% to 6.8%.
In its World Economic Outlook report released on Monday, the IMF said the upward revision for fiscal 2026 reflected "better-than-expected outturn in the third quarter of the year and strong momentum in the fourth quarter."
"India is a key growth engine for the world," Julie Kozack, Director of the IMF's Communications Department said last week in a separate briefing, noting that the Fund had previously estimated growth for fiscal 2026 at 6.6% in its Article IV staff report.
For calendar years 2026 and 2027, the IMF forecast growth of 6.3% and 6.5%, respectively.
Global growth is expected to remain steady, with momentum in high-tech sectors set to slow but still partly offsetting the weakness in other sectors, the IMF said.
Risks remain tilted to the downside, it added, as U.S. tariffs and global uncertainty are expected to weigh on activity, though the drag on growth should fade in 2026 and 2027.
The Fund projected global growth at 3.3% in 2026 and at 3.2% in 2027, broadly in line with an estimated 3.3% outturn in 2025.
It also said oil prices remained low and are expected to fall further on account of tepid demand growth and strong supplies.
In India, inflation is expected to move back to near target levels after a sharp decline in 2025 driven by subdued food prices, the IMF said, referring to the Reserve Bank of India's 2%-6% inflation target band.
