OECD lowers India’s growth forecast for FY26 to 6.4%

The Organisation for Economic Co-operation and Development (OECD) has revised its growth forecast for India by lowering its projection for fiscal 2026 (FY26) to 6.4% from the previously estimated 6.9%.

It also reduced its growth outlook for FY27 to 6.6% from 6.8%, attributing the downgrade to economic uncertainty.

Despite the revision in forecast, India is expected to remain the fastest-growing major economy over the next two years, the OECD said in its Interim Economic Outlook.

Growth for the current fiscal (FY25) is projected at 6.3%, with a marginal increase to 6.4% in FY26.

The OECD’s forecast is conservative when compared with the one made by the Reserve Bank of India (RBI), which in its February monetary policy projected 6.7% growth in FY26.

Moreover, the Economic Survey placed India’s growth within a range of 6.3% to 6.8% for the same period.

Inflation projections by the OECD were also revised, with the forecast for the coming fiscal increasing to 4.5% from 4.2%, indicating a slightly more cautious outlook than RBI’s. However, inflation is expected to decline to 4.1% in FY27.

“The global economy has shown some real resilience, with growth remaining steady and inflation moving downwards. However, some signs of weakness have emerged, driven by heightened policy uncertainty,” OECD secretary-general Mathias Cormann said. “Increasing trade restrictions will contribute to higher costs both for production and consumption. It remains essential to ensure a well-functioning, rules-based international trading system and to keep markets open.”

The full report can be accessed here.