UN projects India growth at 6.4% in 2026, 6.6% in 2027

India’s economy is projected to grow at 6.4 per cent this year and 6.6 per cent in 2027, according to a report by the United Nations.

The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) said in its report released Monday that economies in South and South-West Asia grew by 5.4 per cent in 2025, compared to 5.2 per cent in 2024, driven largely by strong growth in India.

India’s growth edged up 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,” the report titled Economic and Social Survey of Asia and the Pacific 2026 said.

It said economic activity in India moderated in the second half of 2025 as exports to the United States declined by 25 per cent following the introduction of 50 per cent tariffs in August 2025. The services sector remained a key growth driver.

The report projected India to register a growth rate of 6.4 per cent in 2026 and 6.6 per cent next year. Inflation is projected at 4.4 per cent this year and 4.3 per cent in 2027.

The report said foreign direct investment inflows to developing Asian and Pacific economies declined amid trade tensions and geopolitical uncertainty. After an increase of 0.6 per cent in 2024, FDI to the region declined by 2 per cent in 2025, even as global flows increased by 14 per cent.

“Within the Asia-Pacific region, the countries that attracted the largest share of greenfield FDI in the first three quarters were India, Australia, the Republic of Korea and Kazakhstan with USD 50 billion, USD 30 billion, USD 25 billion and USD 21 billion in announced investments, respectively,” it said.

It added that personal remittances sent by Asian and Pacific workers employed overseas continued to rise, cushioning the impact of vulnerable domestic employment conditions.

Remittances have helped sustain consumption of many households, but are facing headwinds.

In India and the Philippines, about 40 per cent of transfers are used for essential spending, including medical expenses, of recipient households.

“However, as the world’s largest remittance recipient of USD 137 billion in 2024, India could face a sizeable loss as the United States has levied a 1% tax on all remittances since January 2026,” it said.

The report also cited estimates by the International Renewable Energy Agency (IRENA), which suggested there were around 16.6 million green jobs globally, with annual job creation of around 0.8 million between 2012 and 2024, reflecting 7 per cent annual growth.

Out of these 16.6 million jobs, 7.3 million were in China, 1.3 million in India and 2.5 million in the rest of Asia — accounting for 44 per cent, 8 per cent and 15 per cent of the global total, respectively.

“Governments can leverage the energy transition to an environmentally sustainable economy to foster new domestic industries and build supportive constituencies,” it said.

It added that public investment and targeted industrial policies can accelerate the emergence of sectors such as renewable manufacturers, grid developers, storage providers and green industrial clusters.

The report cited India’s production-linked incentive scheme, stating that it illustrates how macroeconomic policy can support green industrial development through incentives for domestic manufacturing of solar photovoltaic, batteries and green hydrogen, reducing import dependence while creating new industrial beneficiaries.

“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.