Quality jobs and higher productivity hold the key to India’s 6.8% growth target, says IMF

Reaching a medium-term potential growth of 6.8% will require India to accelerate the creation of high-quality jobs, spur private investment, and boost productivity growth, the International Monetary Fund (IMF) said. The remarks follow the IMF’s decision in its October World Economic Outlook to upgrade India’s medium-term potential growth from 6.5% to 6.8%.

That upward revision factored in India’s favourable demographics, its large and expanding domestic market for goods, and sustained momentum on structural reforms, IMF Communications Director Julie Kozack told reporters.

“But in general, like in many countries, we are encouraging India to take continuing reforms, particularly to focus on how productivity growth can be increased,” Kozack said in response to a question from PTI.

She noted that advancing this medium-term potential depends on stronger private investment alongside productivity gains and quality employment, adding that these priorities will be raised during upcoming Article 4 consultations with India.

Last month, the IMF also lifted India’s growth forecasts for fiscal years 2027 and 2028 to 7%, up from its July projections of 6.4% and 6.7%, respectively.

“India does remain a key growth engine for the world. The economy has strong fundamentals and has shown considerable resilience,” Kozack said.

The International Monetary Fund (IMF) has raised its growth projection for India to 7% for 2026, an upward revision of 0.6 percentage point from its July 2026 forecast, citing stronger-than-expected economic momentum supported by resilient domestic demand and robust services activity.

The latest World Economic Outlook, titled Resilience Under Strain, Urgent Choices, places India among the fastest-growing major economies even as the global economy faces the impact of the Middle East conflict, higher energy prices and uncertainty over the outlook.

The IMF’s baseline projection for India’s growth in 2026 is 7%, compared with 7.8% in 2025. It has retained the growth forecast at 7% for 2027. The 2026 projection is also 0.5 percentage point higher than the IMF’s April 2026 forecast, while the 2027 estimate has been raised by 0.5 percentage point from April.

On a calendar-year basis, the IMF projects India’s growth at 7.4% in 2026 and 7% in 2027.