The Asian Development Bank (ADB) has revised India's GDP growth forecast upward for the current fiscal year to 7 per cent, up from the previous estimate of 6.7 per cent.
The ADB attributes this optimistic outlook to the anticipated surge in both public and private sector investments, coupled with an improvement in consumer demand. India is expected to maintain its status as a key growth engine in the Asia-Pacific region, as outlined in the April edition of the Asian Development Outlook.
For the fiscal year 2025-26, the ADB projects India's growth to reach 7.2 per cent, highlighting the resilience of the economy despite moderating growth in FY2024 and FY2025.
While this forecast is slightly lower than the 7.6 per cent GDP expansion witnessed in the 2022-23 fiscal year, strong investment activity drove growth during that period, compensating for subdued consumption, according to the ADB.
The Reserve Bank of India (RBI) resonates with ADB's growth projections for the current fiscal year, foreseeing a GDP growth rate of 7 per cent.
This optimism is fueled by expectations of a normal monsoon, easing inflationary pressures, and sustained momentum in manufacturing and services sectors. Factors such as increased capital expenditure on infrastructure, private corporate investment, and a robust service sector are anticipated to drive growth in FY2024.
However, despite positive signs of inflation easing, the RBI has maintained its stance on interest rates, prioritizing the gradual attainment of the targeted 4 per cent inflation rate. Inflationary pressures continue to impact households, particularly the poor, with household savings reaching a nearly five-decade low of 5.1% of GDP in FY23.
The growing demand for MGNREGA jobs highlights rural distress and the need for pragmatic measures to improve the livelihoods of the rural population. Malnutrition remains a pressing issue, with India accounting for a significant portion of undernourished individuals globally, particularly among children.
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