IMF cuts India’s FY26 growth forecast to 6.2%

The International Monetary Fund (IMF) has cut its FY26 growth forecast for India by 30 basis points to 6.2%, citing escalating trade tensions and global uncertainty in its latest World Economic Outlook (WEO).

“For India, the growth outlook is relatively more stable at 6.2% in 2025 (2025–26), supported by private consumption, particularly in rural areas, but this rate is 0.3 percentage point lower than that in the January 2025 WEO Update on account of higher levels of trade tensions and global uncertainty,” the IMF report said.

The WEO stressed that escalating trade tensions have generated extremely high levels of policy uncertainty, making it more difficult than usual to establish a central global growth outlook.

The IMF has projected global growth to fall from an estimated 3.3% in 2024 to 2.8% in 2025 (down 0.5 percentage points from the January forecast), before recovering to 3% (down 0.3 percentage points from January) in 2026, with downward revisions for nearly all countries.

“The downgrades are broad-based across countries and reflect in large part the direct effects of the new trade measures and their indirect effects through trade linkage spill-overs, heightened uncertainty, and deteriorating sentiment,” the IMF said.

The IMF report said that India is projected to experience a smaller growth decline in 2025–50 of about 0.7 percentage points. However, the decline, it said, will intensify over 2050–2100 as the country passes its demographic turning point.

The Economic Survey has projected India’s gross domestic product (GDP) growth for FY26 in the range of 6.3%–6.8%. The statistics ministry has pegged GDP growth for FY25 at 6.5%.

India’s wealthiest families ‘under-reporting incomes’

Wealthier families in India are under-reporting their income in order to minimise their tax liabilities, according to new research.

Report author Ram Singh, Delhi School of Economics (DSE) director and a permanent member of the Monetary Policy Committee of the Reserve Bank of India, said: “On average, the total income reported by the bottom 10% of individuals is more than 120% of their wealth; for the wealthiest 5% of individuals, it is just about 3.7% of their wealth”, Singh wrote in his paper, ‘Do the Wealthy Underreport their Income?’.

Singh came to his conclusions by studying the wealth and reported incomes of over 7,600 families and their family members across India, with the raw data taken from the national account of listed companies of the wealthiest Indian families, income tax statistics from the Central Board of Direct Taxes, the Lok Sabha election affidavits (2014 and 2019), and the Forbes list (FL) of billionaires, among others.

The report said that the wealthiest 0.1% of families report a total income of roughly 2% of their wealth, and the wealthiest Indian families on the Forbes list (FL) report a total taxable income of less than 0.6% of their wealth, states the study.

In contrast, the study adds that the bottom 10% of families report 188% of their wealth as total income.

According to the study, the under-reporting of income increases with wealth, and even after adding all types of income, the reported income of the wealthiest 0.1% of families is still less than 20% of their capital income or annual return from wealth. In other words, 80% of the capital income of the top 0.1% goes unreported, Singh said.

Similarly, the paper states that 90% of the capital income of the Forbes-list, ultra-wealthy families goes unreported.

“Besides under-reporting their rental income and disguising their taxable income as tax-free agricultural income, the wealthy also avoid taxes by exploiting gaps in tax rules,” Singh said.

He added: “All wealth groups evade tax on rental and case-based business income and misreport taxable income as tax-free agricultural income. However, the wealthy and super-wealthy engage in tax avoidance [and] exploit gaps in tax rules. Further, they minimise their income-wealth ratio by suppressing dividend pay-outs and take-outs of wages, honoraria and commissions.”

The paper also stated: “Even with the most generous estimates, the tax liability of the top centile [individuals] amounts to 1% of their wealth. For the top one-tenth of the top centile, the total tax liability amounts to less than 0.8% of their wealth. The super-wealthy Indians on the Forbes List pay tax that is less than 0.2% of their wealth.”