Summary: The World Bank has raised India's growth forecast for the current fiscal year to 7% from 6.6%, attributing this to increased government investment in infrastructure. According to the India Development Update, this growth is driven by higher public and household investments in real estate. While the industrial sector grew by 9.9% and services remained robust, growth slowed to 6.7% in Q1 FY25, mainly due to weaker agriculture. India’s GDP grew by 8.2% in FY24, making it the world’s fastest-growing major economy.

Mr. Auguste Kouame, the World Bank's country director for India, stated that India's strong growth amidst global challenges suggests it is unlikely to fall into the middle-income trap if current reforms continue. The IMF has increased its FY25 GDP growth forecast to 7%, and Moody’s has raised its 2024 outlook to 7.2%. The World Bank’s medium-term outlook remains positive, with growth expected to be 6.7% in FY26 and FY27, despite high youth unemployment and declining export related employment. Inflation is forecasted to be 4.5% in FY25, decreasing to 4% by FY27.

Source: IBEF

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