India's GDP growth estimate for FY25 raised from 6.7% to 7% by ADB

The Asian Development Bank (ADB) increased India's GDP growth estimate for the current fiscal year on Thursday from 6.7% to 7%. The ADB stated that the strong growth will be caused by the need for investments in the public and private sectors as well as a slow but steady rise in consumer demand.

Nonetheless, the growth prediction for 2024–25 is less than the 7.6% predicted increase for the 2022–2023 fiscal year. The ADB said that while consumption was subdued in the 2022–2023 fiscal year, strong investment fuelled GDP growth.

The Indian economy was expected to grow 6.7% in the 2024–2025 fiscal year, according to an ADB projection from December of last year.

"The industrial and service sectors had considerable growth in the economy during the fiscal year 2023. The industrial and service sectors had considerable growth in the economy during the fiscal year 2023. Over the course of the projection period, it will continue to grow quickly. Improvements in consumption demand and strong investment demand will be the main drivers of growth. In line with global trends, inflation will continue to decline,” according to the April Asian Development Outlook, which was published on Friday.

Although slowing in FY2024 and FY2025, growth would still be strong, it stated. The ADB has forecasted a 7.2 percent increase for India's GDP for the fiscal year 2025–2026.

As per the ADB, exports would probably be somewhat restrained this fiscal year as the development of the main advanced nations slows down, but they should pick up in FY2025.

While fiscal policy seeks for retrenchment but maintains support for capital investment, monetary policy is anticipated to promote growth even as inflation declines. Overall, growth is predicted to drop to 7% in FY2024 but pick up to 7.2% in FY2025," the report stated. The ADB stated that India has to be more integrated into global value chains in order to increase exports in the medium run.

 The Reserve Bank of India's (RBI) predictions and the ADB's growth forecast for FY25 agree.

According to the RBI's statement from last week, the current fiscal year's GDP growth is expected to reach 7% due to normal monsoon conditions, a reduction in inflationary pressures, and continued expansion in the manufacturing and services sectors.