India's Growth Outlook Moderated by West Asia Tensions and Weak Monsoon, RBI Projects 6.6% GDP

The World Bank’s June 2026 Global Economic Prospects report projects India’s GDP growth at 6.6% for fiscal year 2026‑27, a slight slowdown from previous estimates. The OECD predicts a modest dip to around 6.3‑6.4% over the same period, citing higher energy prices, currency depreciation and rising inflation, which it expects to hit 4.8% in FY 2026‑27.

Reserve Bank of India Governor Sanjay Malhotra reaffirmed a 6.6% growth forecast for the current fiscal year but warned that the ongoing West Asia conflict and an anticipated weak monsoon pose significant risks. He noted that inflation expectations have been lifted to 5.1% for FY27, with retail inflation at 4.38% in June and food price inflation at 5.32%. The RBI will continue to prioritize inflation control while supporting growth, encouraging banks to adopt artificial‑intelligence tools under strict cybersecurity safeguards.

The Indian government is also advancing structural reforms, including a new authorisation framework for telecom services that replaces the legacy licensing regime, and reductions in GST and fuel taxes to support consumer demand. Foreign direct investment remains robust, with USD 95 billion recorded last year and USD 7 billion in the first two months of the current fiscal year.