NEW DELHI: The Asian Development Bank (ADB) has projected a robust economic growth for India, revising its Gross Domestic Product (GDP) forecast for the current fiscal year (FY27) to 6.9 percent, an increase from its previous estimate. The multilateral lending institution anticipates the growth momentum to accelerate further to 7.3 percent in the subsequent fiscal year (FY28), attributing the positive outlook to strong domestic demand, easing financing conditions, and a reduction in U.S. tariffs on Indian goods.
Information was available with The Chenab Times indicating that this revised projection, detailed in the ADB’s latest Asian Development Outlook report, contrasts with earlier forecasts and signals a strengthening economic trajectory for the nation. The ADB’s assessment highlights India’s resilience amidst a complex global economic and geopolitical landscape.
The report, however, cautions that a protracted conflict in the Middle East could pose risks to India’s macroeconomic stability. Potential impacts include elevated energy prices, disruptions to international trade flows, and a decline in remittance inflows, given the Middle East’s significant role in India’s external sector.
Inflation is also a key consideration in the ADB’s outlook. The bank projects inflation to rise from 2.1 percent in FY26 to an estimated 4.5 percent in the current fiscal year. This anticipated increase is attributed to a rebound in food prices from earlier declines, higher global oil prices, currency depreciation, and rising precious metal costs. For the next fiscal year, inflation is expected to moderate to 4 percent, influenced by anticipated lower oil prices.
The Indian economy demonstrated strong performance in the previous fiscal year (FY26), with GDP growth reaching 7.6 percent, surpassing the 7.1 percent recorded in FY25. This growth was supported by resilient household consumption, which benefited from income tax adjustments and falling food prices, alongside consistent public investment.
The ADB’s report specifically states that “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). Activity will be underpinned by strong domestic demand, supported by easing financing conditions, and lower US tariffs on Indian goods.”
Growth is further projected to climb to 7.3 percent in FY28, driven by the implementation of domestic reforms, the positive effects of trade agreements with the European Union, and anticipated increases in government employee salaries. This upward revision reflects a more optimistic view of India’s economic potential in the medium term.
In its December 2025 report, the ADB had projected India’s GDP growth at 6.5 percent for the 2026-27 fiscal year, making the current upward revision a significant adjustment.
While rising inflation, particularly in food and petroleum products, might temporarily temper private consumption in the current fiscal year, the ADB anticipates a marked improvement in GDP growth next fiscal year. This is expected due to strengthening domestic demand, propelled by anticipated hikes in government employee salaries and pensions, and an uptick in investment facilitated by key regulatory reforms.
External demand is also projected to strengthen, with exports expected to benefit from the trade deal with the European Union. However, higher global oil prices, a consequence of the Middle East crisis, are noted as a potential pressure point. These higher prices could fuel inflation, widen the current account deficit, and increase input costs, thereby weighing on overall growth. The extent of these impacts will largely depend on how effectively these price increases are passed on to domestic fuel prices.
The ADB commented that “While limited pass-through could cushion the effect on inflation and growth in the near term, it would increase fiscal pressure through higher subsidy requirements.”
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The Chenab Times News Desk
