3 min0%
20 January 2026|The Hindu
3 min read
EconomyNEWS

IMF Raises India's FY26 Growth Forecast to 7.3 Percent

IMF upgrades India's GDP growth forecast for FY26 to 7.3% from 6.6%.

Background Context

The IMF's role in global economic governance evolved from the Bretton Woods Agreement of 1944, which sought to establish a framework for international monetary cooperation after the disruptions of the Great Depression and World War II. Initially focused on maintaining exchange rate stability and providing short-term financial assistance to countries facing balance of payments problems, the IMF's mandate has expanded over the decades to include surveillance of member countries' economic policies, technical assistance, and lending to address a wider range of economic challenges. Key milestones include the shift to floating exchange rates in the 1970s, the debt crises of the 1980s, and the financial crises of the late 1990s and 2000s, each prompting reforms in the IMF's policies and lending instruments. The IMF's forecasts, like the World Economic Outlook, have become influential benchmarks for assessing global and national economic performance.

The International Monetary Fund (IMF) has revised its estimate of India’s Gross Domestic Product (GDP) growth for the current financial year 2025-26 to 7.3% from its earlier prediction of 6.6%. This upward revision, according to the IMF's January 2026 World Economic Outlook update, reflects stronger-than-expected growth in the third quarter and “strong momentum” in the fourth quarter of the financial year. The IMF projects growth to moderate to 6.4% in 2026 and 2027. The report also projects global growth to remain at 3.3% in calendar year 2026 and 3.2% in 2027. The IMF predicts that inflation in India is expected to return to near-target levels after a decline in 2025, driven by subdued food prices. The Reserve Bank of India’s target for inflation is 4%.

Key Facts

1

IMF: India's FY26 GDP growth forecast 7.3%

2

Previous forecast: 6.6%

3

2026-27 growth projection: 6.4%

4

Global growth 2026: 3.3%

5

RBI inflation target: 4%

Latest Developments

In recent years, the IMF has focused on addressing challenges posed by the COVID-19 pandemic, rising inflation, and geopolitical tensions. The IMF has provided substantial financial assistance to countries struggling with the economic fallout of the pandemic, while also emphasizing the need for fiscal sustainability and structural reforms. The ongoing debate centers on the appropriate balance between supporting economic recovery and managing debt levels, as well as the role of international cooperation in addressing global challenges. Looking ahead, the IMF is expected to play a key role in promoting sustainable and inclusive growth, supporting the transition to a green economy, and addressing the risks posed by climate change and technological disruptions. The future roadmap includes enhancing surveillance capabilities, strengthening lending instruments, and promoting greater policy coordination among member countries.

1 Key Concept to Understand

This article covers important concepts like Inflation. Understanding these will help you answer exam questions better.

Source Articles

IMF upgrades India’s FY26 & FY27 growth forecast to 6.4% in line with global growth uptick - The Hindu

The Hindu•20 January 2026
Read original

World Bank ups FY26 growth outlook to 6.5% on but downgrades next year’s forecast due to Trump tariffs - The Hindu

The Hindu•20 January 2026
Read original

IMF projects India to grow 6.6% in 2025, cuts projection for next year - The Hindu

The Hindu•20 January 2026
Read original

India's 2024 economic growth projection revised upwards by U.N. to nearly 7% - The Hindu

The Hindu•20 January 2026
Read original

RBI raises FY26 GDP growth projection to 7.3% - The Hindu

The Hindu•20 January 2026
Read original

Ready to test your understanding?

12 practice questions available