New Delhi/IBNS: The Asian Development Bank (ADB) has retained Indias growth forecast at 7 percent for the current fiscal year (FY25), with expectations of an accelerated growth rate of 7.2 percent in FY26, according to a report released on Wednesday (Sept. 25).
Indias economy has demonstrated remarkable resilience despite global geopolitical challenges and is set for steady growth, said Mio Oka, ADBs country director for India.
This projection aligns with the Reserve Bank of Indias (RBI) own forecast of 7 percent growth for FY25.
ADB also highlighted that a favourable monsoon across much of the country is expected to boost agricultural output, strengthening the rural economy in FY25.
However, the report indicated that inflation is expected to rise faster than previously anticipated, with consumer inflation projected at 4.7 percent for FY2024, up from the 4.6 percent estimate in the April report.
The surge in food prices is a key driver, despite higher agricultural output, which has limited the central banks ability to adopt a more accommodative monetary stance, according to the Manila-headquartered lender.
Inflation is forecasted to ease to 4.5 percent in FY26, and monetary policy is expected to gradually become less restrictive, though at a slower pace than previously anticipated.
The current account deficit is projected to widen to 1 percent in FY25 and further to 1.2 percent in FY26.
The ADB warned of potential risks, including geopolitical disruptions to global supply chains and commodity prices, as well as weather-related shocks affecting agricultural production.
Another potential downside for FY24 is the possibility of the government missing its capital expenditure targets, as per the ADB report.
