ADB raises India’s GDP growth forecast to 6.9% this fiscal

The Asian Development Bank (ADB) has raised India’s GDP growth forecast to 6.9% this fiscal from its previous forecast of 6.5% but has flagged risks from the West Asia conflict. In the Asian Development Outlook April 2026 released on Friday, the ADB said growth is likely to accelerate to 7.3% next fiscal. The Indian economy grew by 7.6% in FY26.

“The moderation in growth in FY26 (ending 31 March, 2027) is due mainly to heightened global uncertainty, due to the Middle East conflict, higher energy prices, and volatile trade and financial conditions. These external pressures are likely to weigh on exports, inflation, and capital flows in the near term,” the ADB said, adding that growth is expected to pick up next fiscal, supported by strong domestic demand, continued public investment, and an improving external environment.

Inflation is projected to rise to 4.5% in the current fiscal, it further said, adding that this reflects higher food and energy prices. It expects inflation to moderating to 4% next fiscal as supply conditions improve.

ALSO READ:  'Even in our most hopeful scenario...': IMF flags global growth downgrade

The ADB also said that forecasts were informed by assumptions finalised on 10 March under exceptionally high uncertainty envisaging an early stabilisation scenario for the conflict in the Middle East. “Evidence since then points to a higher likelihood of more persistent disruptions,” it cautioned.

The ADB’s growth forecast for India is in line with that of the Reserve Bank of India, which expects GDP growth at 6.9% this fiscal. The World Bank has pegged India’s GDP growth at 6.6% this fiscal year.

“Despite external challenges, India’s growth outlook remains resilient, aided by supportive fiscal and monetary policies and regulatory reforms aimed at enhancing labor flexibility and integration with global value chains,” said ADB Country Director for India Mio Oka. “Over the medium term, investments in clean energy, power sector reforms, and measures to boost manufacturing competitiveness and attract investment will sustain growth,” he further said.

ALSO READ: 'Regime change coming in Bengal': PM Modi attacks Mamata, flags GDP fall and 'syndicate raj'

The ADB expects domestic demand to remain the main driver of growth during the current and next fiscal. Private consumption is likely to remain strong in FY26, supported by rising real incomes, steady rural demand, and easing monetary conditions, although the waning impact of earlier tax cuts and increasing inflation could moderate its pace. It is expected to strengthen in FY27, aided by an expected once-in-a-decade revision to government salaries and pensions.