The Asian Development Bank (ADB) has revised its forecast for India’s GDP growth for the current fiscal year ending on March 31, 2025, projecting a growth rate of 7%, up from its earlier estimate of 6.7%. The upward revision is attributed to robust public and private investment, coupled with expectations of a gradual recovery in consumer demand, particularly in rural areas.
Additionally, the ADB forecasts India’s economy to expand further by 7.2% in fiscal 2025-26, indicating sustained growth momentum. However, the ADB’s growth projection remains slightly lower than the 7.6% pace estimated by India’s National Statistical Office for the previous fiscal year.
While last year’s growth was primarily driven by strong investment, consumer consumption remained subdued. The ADB warns of potential global risks, such as a sharp increase in oil prices or prolonged high interest rates in the West to combat inflation, which could impact India’s economic trajectory.
The ADB highlights India’s vulnerability to high interest rates, citing the rupee’s sensitivity to Western interest rates. It notes that India is likely to be the most affected economy in Asia by such rate hikes.
Despite strong capital expenditure spending by the government, the ADB observes that project completions in the private sector have not kept pace with rising project announcements. This underscores the importance of ensuring timely implementation of private sector projects to sustain economic growth.
Notably, the ADB report refrains from commenting on controversies surrounding India’s national income data integrity or concerns about the heavy reliance on government tax receipts in calculating final GDP figures.
Overall, the ADB’s upward revision in India’s GDP growth forecast reflects optimism about the country’s economic outlook, driven by investment-led growth and a gradual recovery in consumer demand, albeit with some lingering risks on the horizon.
