India has received a higher growth projection from the International Monetary Fund for 2025, with the estimate raised by 0.7 percentage point to 7.3 per cent. The revision reflects strong economic momentum in the fourth quarter of the current fiscal year. The IMF also expects India to remain one of the main growth engines among emerging market and developing economies, even though growth is projected to moderate in the next financial year.
India’s Growth Outlook
- The IMF has revised India’s 2025 growth forecast upward to 7.3 per cent.
- The revision is linked to strong performance in the fourth quarter of the fiscal year.
- For 2026-27, the IMF projects growth at 6.4 per cent.
- India continues to be seen as a key contributor to global growth among major emerging economies.
Inflation and Domestic Demand
- The IMF expects inflation in India to return close to target levels after a sharp decline in 2025.
- Lower food prices are expected to support this moderation.
- Stable inflation may provide further support to domestic demand.
- Price stability remains important for sustaining consumption and investment.
Global Growth Projections
- The IMF has kept global growth at 3.3 per cent for 2026.
- Support is expected from easing trade tensions and accommodative financial conditions.
- Investment linked to technology, especially artificial intelligence, is also expected to aid growth.
- However, the IMF warned that shifts in AI-led investment and tighter financial conditions could affect emerging economies.
Risks and Policy Concerns
- The IMF flagged possible spillover effects from global financial tightening.
- It also noted that productivity gains from AI may lead to a pullback in investment.
- Such changes could affect capital flows and growth prospects in developing economies.
- India’s macroeconomic stability will remain important in this external environment.