India’s economy is expected to grow 7 per cent in both the current and the next fiscal year, the International Monetary Fund said in its October 2026 World Economic Outlook, released on October 13. The forecast is an upgrade for the current year and comes with a caution: the global backdrop, shaped by an energy shock from the Middle East conflict, is weaker and more uneven.

The numbers

The IMF now projects India’s growth at 7 per cent in FY27 (2026-27) and 7 per cent in FY28, according to ANI and Business Standard. For FY27, that is a rise of 0.6 percentage points from the 6.4 per cent it projected earlier, Business Standard reports. Business Today, which reports the figures on a calendar-year basis, says the IMF has India growing 7.4 per cent in 2026 and 7 per cent in 2027, and describes the 2026 forecast as 0.6 points above July and 0.5 points above April.

The reports do not agree on how much the FY28 number was revised: Business Standard says it was raised by 0.3 percentage points, while Business Today describes the 2027 figure as unchanged from the prior forecast. Both agree on the 7 per cent level.

The IMF credits stronger-than-expected momentum, mainly from resilient domestic demand and solid services activity. It also points to favourable demographics, a large and expanding domestic market and continued structural reforms, Business Standard reports. India remains among the fastest-growing major economies, the Fund says.

Inflation

The IMF expects consumer price inflation in India to average 5 per cent in FY27 and ease to 4.4 per cent in FY28, according to Business Standard. Its FY27 estimate is below the Reserve Bank of India’s latest projection of 5.2 per cent for the year. The RBI and the World Bank each raised their FY27 growth projections to 7.1 per cent the previous week, the same report says.

The global picture

India’s upgrade sits against a softer world outlook. The IMF projects global growth of 3.1 per cent in 2026, down from 3.5 per cent in 2025, and 3.4 per cent in 2027. Global inflation is expected to rise to 4.7 per cent in 2026, largely on higher energy and food prices, before easing to 4.1 per cent in 2027, ANI reports. China is projected to slow to 4.5 per cent in 2026, per Business Today.

“The global economy remains resilient, but that resilience is becoming more fragile and more uneven,” the IMF said in the report, titled “Resilience Under Strain, Urgent Choices.” It added that “risks are skewed to the downside.”

Risks to watch

The IMF names a prolonged stalemate or escalation in the Middle East, which could keep energy and food prices high, revive inflation and weaken growth. Business Today reports that its baseline assumes the Strait of Hormuz reopens in March 2027, with a broad return to prewar conditions by October 2027, and that energy prices stay above prewar levels. The Fund also flags a sharp reassessment of the returns on AI investment, which could trigger equity market corrections and tighten financial conditions.

On India specifically, the IMF says the country is not insulated from the global energy shock, and that the impact depends on each economy’s exposure to the conflict and whether it is an energy importer or exporter, per Business Today. The IMF’s own framing is a reminder that a 7 per cent forecast rests on assumptions about energy prices and the conflict that may not hold.