India’s growth momentum remains strong, says World Bank

India’s economy continues to exhibit strong growth momentum, supported by robust domestic demand, resilient services exports and sustained structural reforms, the World Bank said in its latest South Asia Economic Update.The report projects India’s GDP growth at 7.6 per cent for FY2025–26, marking an upward revision from earlier estimates and underscoring the strength of consumption and investment activity.
Private consumption remains a key pillar of growth. Retail demand has held steady, aided by easing inflation, tax rationalisation and improving consumer sentiment, which reached its highest level since the pandemic in late 2025.Strong domestic demand has also helped cushion the impact of softer goods exports. Merchandise exports recorded only marginal gains due to tariff-related disruptions, while services exports remained a bright spot, expanding by around 16 per cent in recent months.The services sector continues to anchor the economy, with segments such as information technology and business services driving export earnings and overall activity. This resilience has played a crucial role in sustaining India’s growth trajectory amid global uncertainties.Manufacturing activity has also gained traction. Industrial output has remained robust, with the sector registering annual growth of over 10 per cent between 2023 and 2025, led by high-growth segments such as electronics.
According to the report, government initiatives, including production-linked incentive schemes and infrastructure improvements, have supported manufacturing expansion and enhanced competitiveness.India’s external trade outlook has improved with ongoing free trade agreements with the European Union and the United Kingdom. These deals are expected to lower tariffs across a wide range of goods and expand market access for Indian exporters.The report highlighted that such policy measures could drive broad-based consumption and real income gains, particularly through reduced prices of manufactured goods.
Macroeconomic stability has further reinforced growth. Inflation remained largely within the target band during 2025, supported by softer food prices. The Reserve Bank of India also lowered policy rates during the year, boosting consumption and investment.India’s financial system remains stable, with well-capitalised banks and improved credit conditions supporting economic activity.The World Bank emphasised that continued structural reforms—including improvements in infrastructure, taxation and financial sector resilience—have strengthened productivity and investor confidence.While external risks such as elevated energy prices persist, the report noted that India’s strong domestic fundamentals and reform momentum position it well to sustain growth in the coming years.

(Business Correspondent)