Asian Development Bank on Friday projected India’s GDP growth at a robust 6.9 per cent for FY2026-27, with an uptick to 7.3 per cent in the following fiscal, driven by strong domestic demand and easing financial conditions.
In its Asian Development Outlook report, the ADB said growth momentum would be supported by lower US tariffs on Indian goods and sustained internal consumption, even as global uncertainties persist. The projection marks an upward revision from its earlier estimate of 6.5 per cent for FY27 made in December 2025.
“Despite a worsening global economic and geopolitical environment, growth in India is forecast to remain robust at 6.9 per cent in fiscal year 2026 (2026-27),” the report noted, adding that domestic demand would continue to anchor economic activity.
The multilateral lender also flagged risks stemming from geopolitical tensions, particularly in West Asia. A prolonged conflict in the Middle East could impact India’s macroeconomic stability through higher energy prices, disrupted trade flows and weaker remittance inflows, given the region’s importance to India’s external sector.
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Inflation, the ADB said, is likely to rise sharply in the current fiscal. It projected inflation to increase to 4.5 per cent from 2.1 per cent in 2025-26, driven by a rebound in food prices, elevated global oil prices, currency pressures and rising precious metal costs. However, inflation is expected to ease to around 4 per cent in FY2027-28, aided by a moderation in oil prices.
India’s economy had expanded by 7.6 per cent in 2025-26, up from 7.1 per cent in the previous year, supported by resilient household consumption, tax cuts and steady public investment.
Looking ahead, the ADB said growth in FY2027-28 would be bolstered by domestic reforms, expected government salary increases and gains from trade agreements, particularly with the European Union. External demand is also likely to strengthen, boosting exports.
At the same time, higher crude oil prices linked to Middle East tensions could widen the current account deficit and push up input costs, weighing on growth. The bank noted that limited pass-through of global oil prices to domestic fuel rates may cushion inflation in the short term, but could increase fiscal pressure through higher subsidies.
Overall, the ADB maintained that India’s growth trajectory remains strong, though vulnerable to global shocks.
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