ADB Adjusts India's Economic Growth Outlook

The Asian Development Bank (ADB) has revised its forecast for India's GDP growth in FY26 downward from 6.7% to 6.5%, attributing the adjustment to global trade uncertainties and the impact of heightened US tariffs on Indian exports and investment flows.

Domestic Consumption and Sectoral Growth

Despite the downward revision, India remains one of the fastest-growing major economies globally. The ADB highlights robust economic activity, with domestic consumption expected to surge, driven by a recovery in rural demand. The agriculture and services sectors are poised to lead growth, benefiting from anticipated above-normal monsoon rains.

Fiscal and Monetary Policy Support

The ADB notes the Indian government's strong fiscal position, supported by higher-than-expected RBI dividend payouts. With inflation on a declining trend, the Reserve Bank of India (RBI) has adopted a neutral monetary stance, facilitating policy rate adjustments to support growth.

Future Growth Prospects

Looking ahead, the ADB forecasts a potential recovery to 6.7% growth in FY27, underpinned by increased investment and favorable financial conditions. Recent policy rate cuts and liquidity injections into the banking system are expected to further bolster economic momentum.