India’s GDP Growth Holds at 6.3% Amid Global Slowdown: World Bank FY26 Report

Key Report Findings: India vs. Global Trends
India’s Growth: FY26 forecast held at 6.3% (though cut by 0.4% from January 2025), FY27 trimmed to 6.5%.
Global Slowdown: 2025 growth slashed to 2.3% (lowest since 2008 non-recession years) due to trade wars and policy uncertainty.
Outperforming Peers: India remains the fastest-growing large economy, buoyed by robust services and recovering agriculture.

Critical Challenges for Resource Mobilization
Investment Slowdown: Global uncertainty dampening private capex—key for job creation.
Export Barriers: Weak trading partners (EU/China) + US tariff spikes threaten manufacturing recovery.
Fiscal Shift: India targets 50% debt-to-GDP by FY31 (from 56.1% in FY26)—requiring tighter fiscal discipline.

Employment & Growth Linkages
Industrial slowdown (offsetting services/agri gains) caused FY25 growth to dip to 6.5%. Sustaining 8%+ needs manufacturing revival to absorb India’s youth bulge.
Opportunity: Services-led exports (IT, R&D) could compensate for goods trade deficits if talent mobility is eased.
Global Triggers Demanding Policy Agility
US-China Trade War: Reciprocal tariffs disrupt supply chains—India must leverage production-linked incentives (PLI).
Silver Lining: World Bank notes global growth could rise 0.2% if trade disputes halve current tariffs.
 
Exam-Focused Q&As
Q: What is the World Bank’s FY26 GDP forecast for India?
A: 6.3% (retained despite global downgrades), making India the fastest-growing large economy.
Q: Define ‘debt-to-GDP ratio’ and India’s target.
A: National debt as % of GDP. India aims for 50% by FY31 (currently 56.1%) to free up resources for development.
Q: Why did the World Bank cut global growth forecasts?
A: Heightened trade tensions (US tariffs) and policy uncertainty affecting 70% of economies.
Q: How do US trade policies impact India’s economy?
A: Tariffs raise export costs, disrupt supply chains, and deter FDI—offsetting gains from China+1 strategies.
Q: What drove India’s FY25 growth slowdown to 6.5%?
A: Industrial deceleration outweighed recovery in agriculture and steady services growth.