ADB Raises India's GDP Growth Forecast to 7% for Current Fiscal Year

ADB revises India's GDP forecast:  The Asian Development Bank (ADB) has revised India's GDP growth forecast for the current fiscal year to 7 per cent, up from its earlier projection of 6.7 per cent. This optimistic outlook is driven by increased public and private sector investment as well as an uptick in consumer demand.

In its April edition of the Asian Development Outlook, ADB highlighted India's significant role as a major growth engine in the Asia-Pacific region. The bank also projected a growth rate of 7.2 per cent for India in the fiscal year 2025-26.

Despite expectations of moderate growth in the fiscal years 2024 and 2025, ADB remains confident in India's robust economic performance. Strong investment, particularly in infrastructure development by both central and state governments, along with a rise in private corporate investment and a resilient service sector, are expected to sustain growth momentum.

The growth estimates for the current fiscal year are slightly lower than the 7.6 per cent expansion witnessed in the 2022-23 fiscal year. ADB attributed the strong growth in the previous fiscal year to robust investment, while consumption remained subdued.

ADB's growth forecast aligns with projections made by the Reserve Bank of India (RBI), which also expects GDP growth of 7 per cent for the current fiscal year. Factors contributing to this growth include expectations of a normal monsoon, moderating inflation, and continued momentum in the manufacturing and services sectors.

Looking ahead, ADB anticipates a pickup in growth momentum in fiscal year 2025, driven by improved goods exports, increased manufacturing productivity, and higher agricultural output.

ADB Country Director for India, Mio Oka, emphasized the importance of the Indian government's efforts to boost infrastructure development and create an enabling business environment. These initiatives, coupled with fiscal consolidation measures, are expected to enhance manufacturing competitiveness, augment exports, and drive future growth.

To support exports in the medium term, ADB suggests greater integration into global value chains. Despite challenges such as supply chain disruptions and uncertainty in global financial conditions, India's economic outlook remains positive.

The overall health of India's banking sector is robust, with improved asset quality and declining non-performing assets. ADB's revised growth forecast underscores India's resilience and potential as a key player in the region's economic landscape.

Established in 1966, ADB remains committed to achieving prosperity, inclusivity, resilience, and sustainability in Asia and the Pacific region. With 68 member countries, including 49 from the Asia-Pacific region, ADB continues its efforts to eradicate extreme poverty while fostering economic development and cooperation.

For developing economies in Asia and the Pacific, ADB forecasts an average GDP expansion of 4.9 per cent this year, driven by resilient domestic demand, improving semiconductor exports, and recovering tourism. However, policymakers are urged to remain vigilant amid potential risks such as supply chain disruptions and uncertainty in US monetary policy.

With PTI Inputs