NEW DELHI. India is projected to grow by 6.3 per cent in 2026-27 (FY27) and 6.4 per cent in 2027-28 (FY28). The Organisation for Economic Co-operation and Development released these projections today in its latest outlook report. The evaluation highlights that India’s real GDP growth faces mounting global challenges stemming from the ongoing West Asia conflict. The OECD stated that the conflict in the Middle East has emerged as the primary factor shaping global economic trajectories. The geopolitical crisis has triggered a sharp surge in international energy and commodity prices. Consequently, these rising input costs have contributed to higher global inflation, erasing real incomes and dampening economic activity worldwide.
Middle East Vulnerabilities and Major Emerging Economies
Energy prices and the prices of key agricultural and industrial inputs produced in the Persian Gulf have soared since February. Production and export curbs across these regional economies are driving global downside risks. As a result, global GDP growth forecasts have been revised downward, while inflation projections have been raised. Among major emerging economies, China’s growth is expected to moderate from 5.0 per cent in 2025 to 4.5 per cent in 2026. The report expects China’s growth to drop further to 4.3 per cent in 2027. Energy-related vulnerabilities and ongoing adjustments in the real estate sector remain key factors weighing on Chinese economic activity.
India’s Softened Monetary Stance and Private Credit Expansion
On India, the OECD noted that the Reserve Bank of India successfully adjusted its primary interest rates. The RBI reduced the policy interest rate from 6.5 per cent in January 2025 to 5.25 per cent in February 2026. This series of rate cuts brought domestic monetary policy to a broadly neutral stance. Average domestic lending rates have also declined following the execution of these central bank interventions. Furthermore, non-food bank credit expanded robustly by 15.9 per cent year-on-year in March. This credit expansion helps sustain domestic commercial liquidity and supports India’s real GDP growth path.
Evolving Inflation Risks and Base Effect Reversals
Despite strong domestic credit indicators, the report warned of a renewed rise in domestic inflationary pressures. This upward price trend is driven mainly by higher food prices as favourable base effects fade. Supply chain bottlenecks arising from the Persian Gulf disruptions could further exacerbate local input costs. Policymakers must closely track these domestic commodity developments to protect the current growth trajectory. Maintaining an optimal balance between inflation management and infrastructure credit remains essential for sustaining India’s real GDP growth. The OECD emphasizes that structural domestic demand will remain a core insulating buffer for the nation.
OECD Macroeconomic Metrics & India Projections
| Parameter / Economic Indicator | FY 2026-27 (FY27) Projection | FY 2027-28 (FY28) Projection |
| India GDP Growth Forecast | 6.3 per cent. | India’s real GDP growth at 6.4 per cent. |
| China GDP Growth Forecast | 4.5 per cent (for calendar 2026). | 4.3 per cent (for calendar 2027). |
| Primary Global Risk Element | West Asia conflict fuel shocks. | Extended input and agricultural asset spikes. |
| RBI Policy Interest Rate | Maintained at 5.25 per cent baseline. | Data-dependent neutral monetary framework. |
| Non-Food Credit Expansion | Expanded 15.9 per cent year-on-year. | Expected to track domestic corporate demand. |
| Domestic Inflation Risks | Higher food prices via fading base effects. | Imported energy cost pass-through pressures. |
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