OECD raises India’s GDP growth forecast to 7.1% citing resilient demand | Economy & Policy News

The Organisation for Economic Co-operation and Development (OECD) on Wednesday raised India’s GDP growth projection for current fiscal by 80 basis points to 7.1 per cent citing resilient domestic demand and government policies that cushioned households and firms from the impact of higher energy prices.

In June, the Paris-based inter-governmental body had projected the Indian economy to grow at 6.3 per cent in 2026-27.

OECD said structural policy reforms that enhance the ability of economies to cope with supply side disruptions are also a key priority for governments at the current juncture.

With regard to India, OECD in its Interim Economic Outlook said growth in several G20 emerging market economies, such as India, was underpinned by resilient domestic demand and government policies that cushioned households and firms from the impact of higher energy prices.

“Despite recent strong momentum, reduced purchasing power is also expected to weaken growth in India through the second half of this year, before a gradual recovery takes place in 2027. In annual terms, growth is projected to fall from 7.8 per cent in fiscal year (FY) 2025-26 to 7.1 per cent in FY 2026-27 and 6.5 per cent in FY 2027-28,” OECD said.

OECD’s GDP growth projection of 7.1 per cent for FY27 is the highest among other international agencies. While Asian Development Bank (ADB), S&P and Moody’s projected a 7 per cent GDP expansion, Fitch Ratings estimates a growth rate of 6.9 per cent. Reserve Bank of India estimates FY27 growth at 6.7 per cent.

“Amongst the emerging-market economies, India is projected to raise policy rates temporarily to help offset stronger inflationary pressures,” OECD said.

In some emerging market economies, such as India, government price support measures are mitigating energy price pressures and will continue to do so in the near-term, OECD said, while projecting inflation in India to average 4.7 per cent in 2026.

It said global economic prospects remain “heavily dependent” on whether a durable resolution to the Middle East conflict is achieved.

OECD, while projecting global growth at 2.9 per cent in 2026 said that the growth moderated in the first half of 2026, but remained resilient in many countries despite the adverse effects from the conflict.

“Persistent uncertainty about the evolution of the Middle East conflict remains a key risk to the baseline projections,” OECD said.