India’s economy to grow 6.4% in 2026 and 6.6% in 2027: UN report
The country's inflation rate is expected to be 4.4 per cent this year and 4.3 per cent in 2027, the report outlined
India's economy is expected to increase by 6.4 per cent this year and 6.6 per cent in 2027, according to a report released by United Nations.
The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) highlighted in its report that the economies of South and South-West Asia rose by 5.4 per cent in 2025 compared to 5.2 per cent in 2024, primarily due to robust growth in India.
According to the Economic and Social Survey of Asia and the Pacific 2026 study, India's growth increased slightly to 7.4 per cent in 2025, supported by robust consumption, especially from the rural economy along with goods and services tax rate cuts, and export frontloading ahead of the United States' tariffs.
It stated that when 50 per cent tariffs were imposed in August 2025, shipments to the US fell by 25 per cent, causing economic activity in India to slow down in the second half of 2025. The services industry continued to be a major engine of growth.
India's growth rate would be 6.4 per cent in 2026 and 6.6 per cent in the next year. The country's inflation rate is expected to be 4.4 per cent this year and 4.3 per cent in 2027, the report outlined.
It added that the trade tensions and geopolitical uncertainties caused a fall in FDI inflows to developing Asian and Pacific economies. Despite a 14 per cent increase in worldwide flows, FDI to the region fell by 2 per cent in 2025 after rising by 0.6 per cent in 2024.
Furthermore, India's production-linked incentive programme serves as an example of how macroeconomic policy can promote green industrial development by providing incentives for domestic production of solar photovoltaic, batteries, and green hydrogen. This reduces reliance on imports while generating new industrial beneficiaries who have a stake in maintaining the transition, as per report.
“Across developing economies in Asia and the Pacific, targeted industrial policies are being used to scale clean technology manufacturing and accelerate the energy transition. Initiatives include India’s Production Linked Incentive scheme for high-efficiency solar modules, China’s strategic subsidies for electric vehicle battery manufacturing,” it said.
Interestingly, on 15 April, the International Monetary Fund (IMF) updated India’s growth forecast for the fiscal year 2026-2027 to 6.5 per cent, an increase from the earlier estimate of 6.4 per cent made in January. It stated that despite global uncertainty, India’s growth forecast is still favourable.
