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India’s growing economic prowess is getting noticed worldwide and now the recent actions of the International Monetary Fund (IMF) has validated the growth that the country has showcased. The IMF this Tuesday, on July 29th, has revalued the growth projection it showed for India and has raised it to 6.4% for the next two fiscal years i.e., FY 2026 and FY 2027.

In its latest World Economic Outlook (WEO) report update that was released this Tuesday, the IMF revalued the Gross Domestic Product (GDP) growth forecast of India for the next two financial years by 20 and 10 basis points, respectively, setting both at 6.4%. They cited the improved global economic conditions as one of the major reasons behind this revaluation.

“In India, growth is projected to be 6.4 percent in [FY 2026 and FY 2027], with both numbers revised slightly upward, reflecting a more benign external environment than assumed in the April reference forecast,” the report said.

Deniz Igan, the Division Chief of IMF, was asked the rationale behind this revised rise in the growth projection of India for the coming years. The Division Chief stated that this decision was made on the back of the suspension of higher tariff rates and lower inflation because of falling food prices.

“What has been the driver of this relatively stable growth is the fact that there has been a reform momentum supporting robust consumption growth and a push for public investment. And to continue the recent good growth performance that we have seen, priorities [for India] would include fostering job creation and absorbing excess labour from the agricultural sectors by reskilling [them]. At the same time, continuing to invest in infrastructure and removing trade restrictions,” Igan suggested.

On the global level, the IMF has upgraded the growth estimates for the coming years 2025 and 2026 by 20 and 10 basis points to 3.0% and 3.1%, respectively. The organisation has stated that factors like eased financial conditions, front-loading in trade ahead of anticipated tariff hikes, lower-than-expected US tariff rates, and expansionary fiscal policies in major economies were the reasons behind these hikes.


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