IMF cuts India's growth forecast for FY26 to 6.2%
The International Monetary Fund (IMF) on Tuesday lowered India's growth projection for the fiscal year 2025-26 to 6.2 per cent.
ANI
Apr 22, 2025 19:47 IST
New Delhi [India], April 22 (ANI): The International Monetary Fund (IMF) on Tuesday lowered India's growth projection for the fiscal year 2025-26 to 6.2 per cent.
This reflects a more cautious outlook amid global trade disruptions posed by the reciprocal tariffs by the US and domestic challenges.
In its World Economic Outlook (WEO) report for April, it slashed the economic growth rate forecast of almost every economy.
In its annual publication, the global body said that the growth outlook for the Indian economy is relatively more stable at 6.2 per cent in 2025 (Fiscal 2025-26).
The growth of the Indian economy is supported by private consumption, especially in the rural areas but this rate is 0.3 percentage points lower than in the January 2025 WEO estimate, impacted by the trade tensions and global uncertainties.
In January of the current year, the IMF had projected a growth rate of 6.5 per cent for both the fiscal years of 2026 and 2027, which will stay at 6.2 for the current fiscal year and 6.3 for the next fiscal year, according to the IMF.
The outlook of the IMF is lower than the projections of the Reserve Bank of India (RBI), which has projected the growth rate of 6.5 per cent.
Announcing the decisions taken by the Monetary Policy Committee (MPC), RBI Governor Sanjay Malhotra highlighted that the agriculture sector is expected to perform well this year due to healthy reservoir levels and strong crop production.
He noted that manufacturing activity is also picking up pace, with business expectations remaining positive. Meanwhile, the services sector continues to show resilience, contributing steadily to economic growth.
He acknowledged that growth is improving after a weak performance in the first half of the last financial year, although it still remains below the level the country aspires to achieve.
Amid the tariff tensions, every credit rating agency has revised growth projections.
According to Morgan Stanley, there is a downside risk of 30-60bps to its growth estimate of 6.5 per cent for F26.
Major consultancy company EY India said in its estimates that the GDP growth will come down to 6 per cent.
Going further, the IMF in its global financial stability report raised concerns citing the tariffs and global uncertainties.
"Our assessment is that the global financial stability risk has increased significantly due to heightened economic policy uncertainty and rising market volatility. The decline in investor confidence that we have seen has triggered recent sell-offs in equity markets. The tightening of global financial conditions is putting downside pressure on economic activity," said IMF Financial Counsellor Tobias Adrian. (ANI)
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