India's Economic Outlook Dims: World Bank and IMF Lower Growth Forecasts for FY2025

India’s economy faces new headwinds as both the World Bank and the International Monetary Fund (IMF) revise their growth projections for FY2025, signaling caution amid global uncertainty.

Revised Growth Projections

The World Bank has adjusted India's GDP growth forecast from an earlier estimate of 6.7% to 6.3% for the fiscal year starting April 1, 2025. This revision reflects concerns over slowing private investment and wider regional economic instability.

Similarly, the IMF has downgraded India’s growth projection from 6.5% to 6.2%, citing mounting global trade tensions, including the effects of recent U.S. tariff policy shifts.

Factors Influencing the Downgrade

Several factors have contributed to these downward revisions:

• Global Economic Uncertainties: Ongoing geopolitical instability and trade disputes are shaking investor confidence and disrupting trade flows worldwide.

• Private Investment Slowdown: A hesitancy in private sector investment has weakened capital inflows and slowed industrial momentum.

• Policy Challenges: Although India has made efforts through monetary easing and reforms, their effectiveness is challenged by broader macroeconomic issues.

Implications for India

The downgraded forecasts suggest that India may struggle to meet its earlier economic growth targets for FY2025. The adjustments emphasize the need for India to:

• Strengthen domestic demand

• Stimulate private investment

• Navigate global uncertainties with strategic policy measures

Despite the downgrade, India's projected growth remains higher than that of most major economies, signaling underlying resilience.