World Bank lifts India's growth to 6.6% as Iran war risk looms
World Bank lifts India's growth to 6.6% as Iran war risk looms
World Bank upgrades India's FY27 growth to 6.6% while warning that US-Iran tensions could add new risks to inflation, energy, and policy space.
The World Bank has raised India's FY27 GDP growth to 6.6%, up from 6.5% projected in January, signaling a steady expansion driven by resilient domestic demand and policy support. The upgrade comes with caveats as global uncertainty persists and tensions in West Asia threaten energy markets.
A key risk highlighted is the potential impact of the US-Iran conflict on oil prices and inflation, with five channels flagged: oil and energy diversification; trade and supply chains; fertiliser and other critical inputs; new sourcing through FTAs and reinvigorated supply routes; and policy space to shield the economy via targeted liquidity support if needed. The government has already been moving to diversify away from oil and to expand domestic capacity in fertilisers and other inputs, while pursuing FTAs with partners to broaden sourcing options.
Meanwhile, other major institutions have presented a slightly varied growth picture: RBI’s latest projections place FY27 growth near 6.9%, OECD pegs it at 6.1%, and Moody’s at around 6.0%. The spread reflects ongoing global risks and domestic resilience, but the central message remains: India’s economy is on a positive trajectory, albeit with external shocks and reforms to watch closely.
The path forward will hinge on energy diversification, steady policy support, and continued reforms to keep inflation within target while sustaining investment. The government’s focus on non-oil imports rerouting and accelerated FTAs, along with RBI's neutral stance that can pivot to liquidity support if needed, could help cushion the economy from external shocks.
