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ADB raises India's GDP growth forecast to 7% for FY25 from 6.7% earlier

12 Apr 2024 Evaluate

With the help of public and private sector investment demand and gradual improvement in consumer demand, the Asian Development Bank (ADB) has raised India's Gross Domestic Product (GDP) growth forecast to 7 per cent for the current fiscal (FY25) from 6.7 per cent earlier. Though, the growth estimates for 2024-25 is lower than 7.6 per cent projected for the 2022-23 fiscal. It noted that strong investment drove GDP growth in the 2022-23 fiscal as consumption was muted. The ADB had in December last year projected the Indian economy to expand 6.7 per cent in the 2024-25 fiscal.

The April edition of the Asian Development Outlook showed that ‘The economy grew robustly in fiscal 2023 with strong momentum in manufacturing and services. It will continue to grow rapidly over the forecast horizon. Growth will be driven primarily by robust investment demand and improving consumption demand. Inflation will continue its downward trend in tandem with global trends’. It added growth will be robust despite moderating in FY2024 and FY2025. For the 2025-26 fiscal, the ADB has projected India's growth at 7.2 per cent.

The ADB said exports are likely to be relatively muted this fiscal as growth in major advanced economies slows down but will improve in FY2025. It also said ‘Monetary policy is expected to remain supportive of growth as inflation abates, while fiscal policy aims for consolidation but retains support for capital investment. On balance, growth is forecast to slow to seven per cent in FY2024 but improve to 7.2 per cent in FY2025’, and added that to boost exports in the medium term, India needs greater integration into global value chains. The ADB's growth forecast for FY25 is in line with the projections made by the Reserve Bank of India (RBI).


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