The Asian Development Bank (ADB) on Thursday raised India’s GDP growth forecast for the current fiscal year to 7 percent from 6.7 percent earlier. The robust growth will be driven by demand for investments in the public and private sectors and by a gradual improvement in consumer demand.
However, the growth estimate for 2024-2025 is lower than the 7.6 percent expected for the 2022-2023 financial year. Strong investment drove GDP growth in the 2022-2023 financial year as consumption was subdued, the ADB said.
The ADB had in December last year forecast that the Indian economy would grow by 6.7 percent in the fiscal year 2024-25.
“The economy has grown strongly in the 2023 financial year, with strong dynamism in manufacturing and the services sector. It will continue to grow rapidly over the forecast period. Growth will be mainly driven by robust investment demand and improving consumption demand. Inflation will continue its downward trend along with global trends,” said the April edition of the Asian Development Outlook released on Friday.
Growth will be robust despite moderation in fiscal 2024 and fiscal 2025, the report said. For the fiscal year 2025-2026, the ADB has forecast Indian growth at 7.2 percent.
The ADB said exports are likely to be relatively subdued this fiscal as growth slows in key advanced economies but will improve in fiscal 2025.
“Monetary policy is expected to continue to support growth as inflation declines, while fiscal policy aims for consolidation but maintains support for capital investment. On balance, growth is expected to slow to seven percent in FY 2024 but improve to 7.2 percent in FY 2025. To boost exports in the medium term, India needs greater integration into global value chains, the ADB said.
The ADB’s growth forecast for FY25 is in line with the Reserve Bank of India’s (RBI) projections.
The RBI had last week said that GDP growth in the current fiscal is projected at seven percent, based on expectations of a normal monsoon, easing inflationary pressures and continued momentum in the manufacturing and services sectors.
First print: April 11, 2024 | 7:46 am IST