World Bank Sees India's Growth Staying Strong Despite Global Headwinds

The World Bank expects India to maintain robust economic growth, driven by investments in its people, businesses, and expanding international trade partnerships. Paul Procee, Operations Manager and Acting Country Director for India at the World Bank, highlighted India’s favorable business environment and large consumer market as key attractions for foreign investment. The RBI held the benchmark repo rate steady at 5.25% to provide market stability, while the government exempted foreign portfolio investors (FPIs) from capital gains tax on government securities. Previously, FPIs faced a 12.5% tax on long-term securities and a 20% withholding tax on interest income. The RBI also introduced a dollar-rupee swap facility for FCNR(B) deposits to attract dollar inflows and stabilize the rupee, which has declined over 6% in 2026. These measures aim to sustain growth amid rising geopolitical tensions in West Asia, elevated global energy prices, and inflation risks. The RBI projected inflation at 5.1% but warned of potential supply-chain disruptions and crude oil price volatility. Growth forecasts were revised downward to 6.6% from 6.9%, with markets anticipating possible interest rate hikes later this year. Procee emphasized India’s large consumer base and expanding trade agreements as major growth opportunities. He noted that the country’s focus on private-sector growth and bilateral partnerships will support long-term economic resilience. The coordinated efforts by the RBI and government reflect a strategic push to attract foreign capital amid global economic uncertainties.