IMF Raises India’s Growth Forecast To 7.3% For FY25–26, Fastest Among Major Economies

India has once again emerged as the brightest spot in the global economic landscape, with the IMF raising its growth projection for FY25–26 to a robust 7.3% on Monday. The upward revision of 70 basis points reflects a stronger-than-anticipated third-quarter performance and sustained momentum heading into the fourth quarter, underscoring the economy’s underlying resilience.

India Outpaces Global Peers

In October 2025, under the baseline assumption of prolonged 50% US tariffs, the IMF had projected real GDP growth of 6.6% for FY25–26, before moderating to 6.2% in FY26–27. The revised outlook places India well ahead of global peers, with growth significantly outperforming the IMF’s projection for the world economy at 3.3% in 2026.

Domestic Factors Drive Momentum

While India’s expansion is expected to moderate gradually to around 6.4% in subsequent years as cyclical factors ease, it is still set to remain the fastest-growing major economy globally. The IMF attributed the improved outlook to favourable domestic conditions, including prudent monetary management, calibrated fiscal consolidation, and resilient private consumption.

Strong Fundamentals Support Growth

Strong public investment, particularly in infrastructure, alongside a steady recovery in manufacturing and services, has reinforced growth despite persistent global uncertainties. India’s macroeconomic fundamentals have strengthened meaningfully, with headline inflation declining sharply due to subdued food prices, providing room for policy stability.

Resilience Amid Global Uncertainty

The financial system remains resilient, with banks and corporates supported by adequate capital buffers and non-performing assets at multi-year lows. Fiscal consolidation has progressed steadily, while the current account deficit remains contained, aided by resilient services exports. Despite lingering geopolitical risks and trade uncertainties, India’s ability to absorb external shocks has strengthened investor confidence and reinforced its position as a preferred destination for long-term capital.