NEWS – The Asian Development Bank (ADB) raised its projections for India’s economic growth for the current financial year (FY25) to 7%

HIGHLIGHTS

• ADB’s Economic Growth Projections:
  • Raised India’s FY25 economic growth projection to 7% from 6.7%
  • Predicts FY26 GDP growth at 7.2%, expecting momentum from infrastructure spending, private investment, service sector growth, and consumer confidence.
• Growth Drivers According to ADB:
  • Higher capital expenditure by governments, private corporate investment, service sector strength, and improved consumer confidence.
  • FY25 growth from infrastructure development, rising private investment, service sector, and FY26 growth from exports and increased productivity.
• India’s Position Among Major Economies:
  • India remains the fastest growing major economy due to domestic demand and supportive policies.
  • Efforts in infrastructure development, fiscal consolidation, and business environment enhancement key to boosting manufacturing competitiveness and exports.
• Consistent Growth Projections Across Agencies:
  • ADB’s FY25 forecast aligns with RBI’s at 7%.
  • Various international agencies like World Bank, IMF, Moody’s, Fitch, and S&P Global also revised India’s GDP growth upwards recently.
• Inflation and Monetary Policy Outlook:
  • Inflation projected at 4.6% for FY25, easing to 4.5% in FY26.
  • Easing inflation may lead to less restrictive monetary policy, facilitating increased bank credit.
• Sector-wise Growth Expectations:
  • Financial, real estate, and professional services to grow; manufacturing to benefit from lower input costs.
  • Expectations of normal monsoon to boost agriculture sector growth.
• Foreign Investment and Exports Outlook:
  • Near-term FDI inflow impact due to global financial conditions but expected to pick up in FY26 with increased industry and infrastructure investment.
  • Goods exports affected by lower growth in advanced economies but expected to improve in FY26 with global growth recovery.
• Key Risks to Economic Outlook:
  • Unanticipated global shocks such as supply disruptions in oil markets and weather events impacting agriculture output are identified as risks.