In a significant announcement, the World Bank on Tuesday, October 7, 2025, revised India’s growth forecast for the current fiscal year upwards to an impressive 6.5%. This marks an increase from its earlier estimate of 6.3%, reinforcing India’s position as the world’s fastest-growing major economy. The institution credits this buoyant outlook largely to the sustained strength of domestic consumption.
However, the positive projection comes with a notable caveat. The World Bank explicitly warned about the potential implications of the 50% tariffs recently levied by the United States on Indian shipments. These tariffs, affecting approximately three-quarters of India’s goods exports to the U.S., are expected to have a tangible impact on the country’s economic landscape in the coming year.
Consequently, the World Bank also slightly adjusted its GDP growth forecast for the subsequent fiscal year, 2026-27, lowering it to 6.3% from the previously anticipated 6.5%.
According to the World Bank’s ‘South Asia Development Update’ for October 2025, India’s economic resilience is deeply rooted in favorable domestic conditions. Improved agricultural output and a healthy rise in rural wage growth have played crucial roles. Furthermore, the Indian government’s ongoing reforms to the Goods and Services Tax (GST) system, which include streamlining tax brackets and simplifying compliance procedures, are anticipated to further bolster economic activity.
It’s worth noting that related economic indicators show a positive trend, with GST collections seeing a 9% increase to ₹1.89 lakh crore in September, reflecting strengthened economic activity.
Looking at the broader region, the report indicates that overall growth in South Asia is expected to experience a sharper deceleration, slowing from 6.6% in 2025 to 5.8% in 2026. Despite this regional slowdown, India’s growth trajectory is projected to remain more robust compared to other emerging market and developing economies (EMDEs) regions.
The update also provides an encouraging assessment of inflation, expecting it to either remain within or trend towards the targets set by the central bank.