NEW DELHI, April 9, 2026\u00a0\u2014 Growth in India is projected at 6.6% in FY27, as higher energy prices caused by the Middle East conflict and supply chain disruptions weigh on economic activity. But even with the slowdown, India remains among the fastest-growing major economies in the world, says the World Bank\u2019s latest economic update.<\/p>\n
Released today, the India Development Update<\/a> says that despite significant downside risks stemming from the conflict, the economy\u2019s strong macroeconomic fundamentals and policy buffers offer some insulation. Substantial foreign reserves, low inflation, predominantly rupee-denominated public debt, a healthy financial sector, and trade diversification efforts play a major role in providing resilience from external headwinds.<\/p>\n \u201cBoosting private sector-led growth will be critical to strengthening economic resilience and supporting more young people to enter the workforce,\u201d\u00a0said\u00a0Paul Procee, World Bank Acting Director for India.\u00a0\u201cTo 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.\u201d<\/p>\n The India Development Update is a companion piece to the World Bank Group\u2019s South Asia Economic Update, which examines economic developments and prospects in the South Asia region. The latest South Asia Economic Update,\u00a0Working with Industrial Policy,<\/a> projects growth in South Asia to slow to 6.3% in 2026\u2014from 7% in 2025\u2014due to disruptions in global energy markets. Despite the slowdown, South Asia continues to grow faster than other emerging markets and developing economies. Growth is expected to recover to 6.9% in 2027.<\/p>\n The regional report also includes an in-depth analysis of the region\u2019s use of industrial policy\u2014the range of policy tools governments are using to shape what an economy produces, rather than leaving it to markets alone. Governments around the world are increasingly using industrial policy, and in South Asia industrial policies are implemented at roughly twice the rate of other emerging economies. But these measures have delivered mixed results in South Asia.<\/p>\n \u201cSouth Asia”s mixed success on industrial policy in part reflects the region\u2019s limited implementation capacity, fiscal space, and market size in some countries,\u201d said\u00a0Franziska Ohnsorge, World Bank Group Chief Economist for South Asia.\u00a0\u201cWhile 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.\u201d<\/p>\n