Key takeaways:
- The IMF projects India’s economy to grow 7% in FY27 and FY28.
- Global economic growth is forecast to reach 3.1% in 2026.
- India’s inflation could reach 5% in FY27 before easing in FY28.
The International Monetary Fund (IMF) has raised the India GDP growth forecast to 7% for FY27 and FY28, citing resilient domestic demand, services activity, and favourable demographic trends. The revised outlook places India’s projected growth above the global economy’s expected expansion of 3.1% in 2026. For Indian entrepreneurs and business owners, the estimates offer a view of expected economic activity, while inflation and energy costs remain important factors.
India’s growth outlook strengthens against global trends
In its October 2026 World Economic Outlook, the IMF raised its growth estimate for India in FY27 to 7%, up from 6.4% projected in July. It also revised its FY28 forecast upwards to 7% from 6.7%.
The IMF identified an expanding domestic market, favourable demographic trends, and continued structural reforms as factors supporting India’s growth potential. Domestic consumption and services activity have also helped the economy maintain momentum despite uncertainty in international markets.
The Fund expects the global economy to grow by 3.1% in 2026, slightly above its July estimate of 3%. Global growth stood at 3.5% in 2025. For 2027, the IMF projects growth of 3.4%, unchanged from its previous forecast.
India’s projected growth rate is more than twice the expected global rate for 2026. The figures reflect different growth paths across economies, with domestic demand and services supporting India’s outlook.
The Reserve Bank of India (RBI) has projected growth of 7.1% for FY27, slightly above the IMF’s India GDP growth forecast of 7%.
For businesses, the India GDP growth forecast provides context for planning around consumer demand, operating capacity, and investment. However, actual results will depend on conditions across individual industries and changes in domestic and international markets.
Oil prices and inflation remain key economic risks
Higher crude oil prices remain a potential source of pressure for India, which relies heavily on imports to meet its energy needs.
The IMF’s October outlook assumes an average crude oil price of $95.74 per barrel in 2026, an increase of around 41% from 2025. It expects the average to fall to $87.39 per barrel in 2027.
Sustained high oil prices could raise India’s import bill and put pressure on its current account balance. Higher energy costs can also increase transport, manufacturing, and other operating expenses for businesses. If companies pass these costs on to consumers, household purchasing power may come under pressure.
The IMF expects India’s consumer inflation to reach 5% in FY27 before easing to 4.4% in FY28. It also projects the current account deficit to reach 1.5% of gross domestic product in FY27.
Globally, inflation is expected to reach 4.7% in 2026 before moderating to 4.1% in 2027. Higher energy and food prices are among the factors behind the projection.
The IMF also noted that investment linked to artificial intelligence has supported economic activity in some parts of the world, although the benefits have varied across economies. Energy price increases and uncertainty in international markets remain risks to the global outlook.
India’s revised forecast points to continued economic expansion over the next 2 fiscal years. The pace of growth will also depend on domestic spending, inflation, energy prices, and global trade and investment conditions.
