India's economy is projected to grow at 7.2% in the fiscal year 2025-26, according to the World Bank's latest Global Economic Prospects report. This forecast highlights India as one of the fastest-growing major economies in the world, driven by strong domestic demand despite rising global trade tensions.

The World Bank's projection indicates a positive outlook for South Asia, with growth strengthening to 7.1% in 2025, primarily due to India's resilient economic activity. This offsets the impact of global trade frictions and policy uncertainties in the region. The expansion is attributed to robust domestic demand, including strong private consumption, supported by tax reforms and increasing household earnings in rural areas.

While the World Bank anticipates a slight moderation in India's growth to 6.5% in FY27, this is largely based on the assumption that higher US import tariffs will remain in effect. However, the report suggests that the adverse effects of these tariffs could be mitigated by stronger domestic demand and more resilient exports than previously expected. Even with these tariffs, India is expected to maintain its position as the fastest-growing economy among the world's largest economies. The growth forecast is unchanged from earlier projections, demonstrating confidence in India's economic fundamentals.

The World Bank anticipates that growth will rebound to 6.6% in FY28, fueled by strong services activity, a recovery in exports, and improved investment flows. This positive outlook is reinforced by expectations of easing financial conditions and fiscal expansion in major economies, which should help cushion the impact of softer trade and demand.

Other organizations have also offered their perspectives on India's economic growth. The statistics ministry projected the economy to grow 7.4% in 2025-26. The Organisation for Economic Co-operation and Development (OECD) projects India's growth at 6.7% in FY26, while the International Monetary Fund (IMF) expects 6.6% growth in calendar year 2026. The Asian Development Bank (ADB) has also upgraded its FY26 growth forecast to 7.2%, citing robust domestic consumption and solid export performance.

Conversely, South Asia's growth is projected to slow to 5.8% in 2026, a downward revision from the April forecast, due to an uncertain global environment, socio-political unrest, and labor market disruptions potentially caused by emerging technologies like artificial intelligence.