THEBUSINESSBYTES
BUREAU
NEW
DELHI, APRIL 9, 2026
India is expected to
remain among the world’s fastest-growing major economies, with growth projected
at 6.6 per cent in FY27, even as rising energy prices triggered by the Middle
East conflict and persistent supply chain disruptions weigh on global economic
activity, according to the latest India Development Update released by the
World Bank.
The report highlights
that despite emerging downside risks stemming from geopolitical tensions and
global market volatility, India’s strong macroeconomic fundamentals and prudent
policy buffers provide a significant cushion against external shocks. Robust
foreign exchange reserves, relatively low inflation, predominantly
rupee-denominated public debt, a stable financial sector, and ongoing trade diversification
efforts collectively reinforce the country’s economic resilience.
“Boosting private sector-led growth will be
critical to strengthening economic resilience and supporting more young people
to enter the workforce,” said Paul Procee, World Bank Acting Director for India. “To achieve Viksit Bharat, a
predictable, business-enabling environment will help to unlock investment and
create jobs at scale in priority sectors like energy and infrastructure,
manufacturing, tourism, healthcare, and agribusiness.”
The India Development
Update accompanies the broader South Asia Economic Update of the World Bank
Group, titled Working with Industrial Policy, which analyses regional economic
trends and policy directions. The report projects South Asia’s growth to
moderate to 6.3 per cent in 2026, compared to 7 per cent in 2025, primarily due
to disruptions in global energy markets. However, the region is still expected
to outperform most other emerging markets and developing economies, with growth
forecast to rebound to 6.9 per cent in 2027.
A key focus of the
regional study is the increasing use of industrial policy — policy tools
deployed by governments to strategically influence economic production patterns
rather than relying solely on market forces. The report notes that South Asian
countries employ industrial policy instruments at nearly twice the rate of
other emerging economies, though outcomes have been mixed across the region.
“South Asia's mixed success on industrial policy in part reflects the region’s limited implementation capacity, fiscal space, and market size in some countries,” said Franziska Ohnsorge, World Bank Group Chief Economist for South Asia. “While broad-based reforms remain the priority, well-calibrated industrial policies could address specific market failures, including through measures such as industrial parks, skill development programs, market access assistance, and improving export quality standards.”
The South Asia Economic Update underscores the importance of carefully designed policy interventions in key sectors such as urban development, tourism and digital services, alongside sustained improvements in the business climate, regulatory predictability, and institutional capacity — factors considered essential to sustaining growth momentum and generating employment opportunities across the region.
