OECD Projects India’s Growth at 6.3% in FY27 and 6.4% in FY28 Despite Global Economic Headwinds
- IBEF
- June 4, 2026
India is expected to remain the fastest-growing major economy, with the Organisation for Economic Co-operation and Development (OECD) forecasting growth of 6.3% in FY27 and 6.4% in FY28, despite rising global economic uncertainties linked to the ongoing conflict in West Asia. According to the OECD’s latest economic outlook, the conflict has become a key factor shaping global growth prospects by driving up energy and commodity prices and increasing inflationary pressures across economies. While global growth forecasts have been revised downward, India’s economic momentum is expected to remain resilient, supported by strong domestic demand, robust credit growth and continued policy support. The report noted that the Reserve Bank of India (RBI) reduced the policy rate from 6.5% in January 2025 to 5.25% in February 2026, bringing monetary policy to a broadly neutral stance. Average lending rates have declined, while non-food bank credit expanded by 15.9% year-on-year in March 2026, supporting investment and consumption activity across the economy.
The OECD also expects a more expansionary fiscal policy stance in FY27 to cushion the impact of elevated energy prices on households and businesses. While the Union Budget targets a reduction in the fiscal deficit from 4.4% of GDP in FY26 to 4.3% in FY27, temporary measures aimed at mitigating energy price shocks could widen the deficit by around 0.4% points compared with the budgeted path. These measures are expected to support household incomes and consumption in the near term, although they may slow the pace of public debt reduction. Public debt is estimated to decline to 54.7% of GDP by FY28, while fiscal policy is expected to return to a moderate consolidation path as energy prices stabilise and temporary support measures are gradually withdrawn. The outlook reinforces India’s position as the fastest-growing major economy, supported by resilient domestic demand, policy stability and continued investment-led growth despite a challenging global environment.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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