Looking ahead to the 2025-26 fiscal year, the ADB anticipates India's growth to reach 7.2 percent. Despite projections of moderation in growth for FY2024 and FY2025, the economy exhibited robust expansion in FY2023, primarily driven by vigorous momentum in the manufacturing and services sectors. The anticipated growth will be propelled by robust investment demand and an uptick in consumption. Furthermore, inflation is expected to follow a downward trajectory in line with global trends.
The ADB's growth forecast aligns closely with projections by the Reserve Bank of India (RBI), which last week estimated GDP growth for the current fiscal year at 7 percent. Factors contributing to growth in FY2024 include higher capital expenditure on infrastructure development by central and state governments, increased private corporate investment, strong performance in the service sector, and enhanced consumer confidence.
The ADB underscores the importance of greater integration into global value chains to boost exports in the medium term. It anticipates net exports to gradually improve in FY2025-26. The banking sector's health remains robust, with improved asset quality and declining non-performing assets.
While the economic outlook appears promising, risks such as supply chain disruptions, uncertainties in US monetary policy, extreme weather events, and property market vulnerabilities in China warrant vigilance. Nevertheless, the ADB remains committed to fostering prosperity, inclusivity, resilience, and sustainability across Asia and the Pacific, in alignment with its goal of eradicating extreme poverty.
