IMF lifts India's FY27 growth forecast to 7% on strong domestic demand

The IMF's upward revision signals renewed optimism about India's economic trajectory, with the fund citing resilient domestic demand as a key driver of expansion. The upgrade reflects expectations that consumer spending and investment activity will remain robust despite global headwinds, supporting sustained growth momentum across the coming fiscal year.

The fund's assessment points to India's services sector as a particularly bright spot in the economic landscape. The strength of India's IT, financial services, and other service industries continues to underpin overall economic performance and attract foreign investment, bolstering the outlook for continued expansion.

The IMF's projection for fiscal year 2028 was similarly lifted to 7%, indicating confidence that India's growth trajectory will stabilize at elevated levels beyond the near term. This sustained forecast reflects expectations of structural factors supporting long-term growth, including demographic dividends, ongoing infrastructure investments, and the country's expanding role in global supply chains.

The upgraded forecasts come as India navigates a complex external environment, with global growth remaining uneven and inflation concerns persisting in several economies. However, the domestic-demand-led nature of India's growth model has provided some insulation from international volatility, allowing policymakers to focus on sustaining productivity gains and managing inflation within acceptable ranges.