The Organisation for Economic Cooperation and Development (OECD) on Thursday projected India’s economy to grow at 6.1% in 2026-27. The OECD estimated that growth would remain below 6.5% for the next two fiscals, while it would be 7.6% for the current fiscal.
According to the report released by the OECD, there will be slower growth and sharply higher inflation in India because of the rising energy prices driven by the West Asia crisis. The OECD, in its interim economic outlook, said the Reserve Bank of India (RBI) will have to temporarily raise repo rates in the June quarter to deal with the inflationary pressures.
“The decline in tariffs should support growth in India, though gas rationing will disrupt some production activities and fiscal support is expected to fade, with growth easing from 7.6% in fiscal year (FY) 2025-26 to 6.1% in FY 2026-27 and 6.4% in FY 2027-28,” stated the OECD. It also stated that in India, the fading deflationary impact of past food and energy price-reducing shocks will be exacerbated by the recent surge in global energy prices, pushing inflation up from 2.0% in FY 2025-26 to 5.1% in FY 2026-27 and 4.1% in FY 2027-28.
Despite a lower GDP projection, growth was also more rapid than anticipated in India, following national accounts revisions and favourable labour market conditions, with unemployment rates at relatively low levels, stated the OECD. However, it cautioned about the broader risks to global supply chains that could significantly impact the fertilizer industry in India.
With persisting global uncertainties, the OECD has projected the global growth to be supported by strong momentum in technology-related investment and production, lower tariff rates than previously assumed, and carry-over from robust outcomes in 2025. Global growth outlook remained unchanged for 2026 at 2.9%, but estimates for 2027 have been lowered to 3% from 3.1% earlier, according to the OECD Economic Outlook, Interim Report March 2026.