The International Monetary Fund (IMF) has raised its forecast for India’s economic growth in fiscal 2026 to 7.3%, an upward revision of 0.7 percentage points, citing strong momentum in the economy. This marks a significant boost from earlier projections and underscores India’s role as a key engine of global growth.

The IMF, in its World Economic Outlook report released on Monday, noted that the revision reflects a “better-than-expected outturn in the third quarter of the year and strong momentum in the fourth quarter.” Analysts said this upward adjustment highlights the resilience of India’s economy amid global uncertainties.

India’s National Statistics Office had earlier this month revised the country’s growth estimate to 7.4% for the year ending March 31, surpassing the government’s initial projection of 6.3% to 6.8%. The IMF’s forecast aligns closely with this optimistic domestic assessment, indicating confidence in India’s fiscal management and policy framework.

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However, the IMF cautioned that growth is expected to moderate to 6.4% in the next two fiscal years as cyclical factors fade. This slowdown is seen as a natural correction following the current fiscal year’s robust performance rather than a structural weakness in the economy.

Julie Kozack, Director of the IMF’s Asia and Pacific Department, emphasised India’s strategic importance, saying, “India is a key growth engine for the world, and its domestic demand continues to support global trade and investment flows.” She also highlighted ongoing reforms in infrastructure, digitalisation, and financial markets as factors sustaining momentum.

With global markets closely watching India’s trajectory, policymakers in New Delhi are likely to leverage this positive forecast to attract further foreign investment, boost manufacturing, and sustain employment growth. The strong momentum provides a window to accelerate long-term reforms that could cement India’s position as one of the world’s fastest-growing major economies.

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