New Delhi, 15 January (H.S.): The World Bank elevated its projection for India's gross domestic product (GDP) growth in the current fiscal year 2025-26 to a robust 7.2 percent on Thursday, attributing the upward revision to resilient domestic demand and efficacious tax reforms, surpassing its June estimate by a substantial 0.9 percentage points.

This optimistic outlook, detailed in the bank's flagship 'Global Economic Prospects' report, anticipates India sustaining its trajectory as the fastest-expanding among major global economies despite headwinds from sustained 50 percent U.S. import tariffs on approximately three-quarters of Indian exports.

The report further delineates a moderated 6.5 percent expansion for fiscal year 2026-27, followed by acceleration to 6.6 percent in 2027-28, buoyed by vigorous services sector momentum, export resurgence, and investment acceleration.

Domestic Dynamism Offsets Global Frictions

Robust internal consumption, bolstered by superior-than-anticipated agricultural yields and rural wage escalation, underpins the enhanced FY26 projection, complemented by Goods and Services Tax (GST) streamlining that curtails tax slabs and compliance burdens to invigorate economic activity.

Notwithstanding U.S. tariff persistence—projected to dampen export momentum—the bank reaffirms India's preeminence, with South Asia's regional growth decelerating to 5.8 percent in 2026 from 6.6 percent in 2025, yet outpacing other emerging markets.

Inflation trajectories align with central bank targets, fostering monetary stability amid global policy flux.

Sequential Trajectory Signals Sustained Momentum

The FY27 moderation to 6.5 percent reflects tariff-induced export compression, though FY28's uptick to 6.6 percent anticipates services-led export rebound and capital infusion, aligning with government projections exceeding prior 6.3-6.8 percent bands buoyed by Q1 fiscal surges and GST rationalization.

This narrative unfolds against concurrent macroeconomic pulses—from Maharashtra's electoral market halts to CSPOC's parliamentary conclave—positioning India as a growth lodestar amid U.S. semiconductor imposts and Venezuelan realignments.

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Hindusthan Samachar / Jun Sarkar