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Informist, Wednesday, Apr. 9, 2025

 

--ADB cuts India FY26 GDP growth forecast by 30 bps to 6.7% 

--ADB projects India FY27 GDP growth at 6.8% 

--ADB: Favourable econ policies, robust demand to push India growth higher 

 

NEW DELHI – Asian Development Bank has lowered its India GDP growth forecast for the financial year started Apr. 1 by 30 basis points to 6.7%. The development bank, as part of its Asian Development Outlook report, also projected India's GDP growth at 6.8% for FY27.

 

The Indian economy likely grew 6.5% in FY25, as per the government's second advance estimate, much lower than the 9.2% growth seen in FY24. Growth in India moderated last year because of slower public capital investment and tighter credit conditions, ADB said. 

 

India's GDP growth, however, is expected to pick up in FY26 and FY27 on the back of favorable macroeconomic policies and robust consumption demand, ADB said. Growth is seen rising quicker than last year even as short-term prospects for private investment and exports are dampened by global factors, the development bank added.

 

More favorable monetary and fiscal policies, rising rural incomes, and moderating inflation, will boost consumer confidence and in turn support GDP growth in India, ADB said. India's services sector is expected to remain robust, while the manufacturing sector outlook will improve, helped by reduction in energy costs, the development bank said. ADB's growth forecast of 6.7% for FY26 is the same as the Reserve Bank of India's projection for this year.

 

"India continues to show resilient growth despite global uncertainties, driven by the government of India's focus on infrastructure development and job creation," said ADB Country Director for India Mio Oka. "The further strengthening of the manufacturing sector through regulatory reforms, combined with the already robust services and agriculture sectors and the recently announced tax incentives for the middle class, will help sustain India's strong economic growth trajectory," Oka was quoted as saying in a press release.

 

ADB retained its inflation forecast for India at 4.3% for FY26. It also projected inflation in India to fall to 4.0% in FY27. India's CPI inflation fell to a seven-month low of 3.61% in February and economists polled by Informist project March inflation at 3.6% as well. The RBI projects inflation to average 4.2% for FY26.  

 

"Inflation (in India) will moderate in line with global trends and stronger agriculture output," ADB said. "However, food inflation may become a challenge in the medium term as extreme weather events become more frequent and/or intense." Policy interventions around water, crop resilience and diversification, and expansion of processing and storage infrastructure will help mitigate volatility in food prices, the report said.  End

 

Reported by Shubham Rana

Edited by Tanima Banerjee

 

 

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