By Anjali Sharma
WASHINGTON – The Asian Development Bank on Friday said in its Outlook report India’s GDP growth is expected to remain “robust” at 6.9 per cent in the current fiscal and rise to 7.3 per cent in the next fiscal.
ADB stated that the growth will be supported by easing financing conditions and lower US tariffs on Indian goods.
It added that a prolonged conflict in West Asia could undermine India’s macroeconomic performance through multiple channels.
The report said that thigher energy prices, disruptions to trade flows, and weaker remittance inflows given the region’s continued importance for India’s external sector—remain key risk factors.
ADB projected that inflation will more than double from 2.1 per cent in 2025–26 to 4.5 per cent in the current fiscal due to a rebound in food prices. Higher global oil prices, currency weakness, and rising precious metal prices are also expected to contribute to inflation.
The inflation is projected to ease to 4 per cent in the next fiscal, primarily due to lower oil prices.
It noted that Indian economy grew 7.6 per cent in the previous fiscal, faster than the 7.1 per cent recorded in FY 2024–25.
The growth was supported by resilient household consumption, aided by cuts in income tax and GST, falling food prices, and steady public investment.
The World Bank also projected India’s growth at 6.6 per cent for the financial year 2026–27.
It noted that growth risks are tilted to the downside, even as ample foreign exchange reserves and a well-capitalized banking system help manage potential shocks.
The World Bank observed that growth accelerated from 7.1 per cent in FY25 to 7.6 per cent in FY26, driven by strong domestic demand and export resilience.
Moody’s Ratings has also revised India’s economic growth estimate downward to 6 per cent for the current fiscal, from 6.8 per cent earlier.
Domestic rating agency ICRA expects growth to moderate to 6.5 per cent in FY27, citing the adverse impact of elevated energy prices and concerns over energy availability amid the West Asia conflict.
The updated forecasts come at a time of heightened uncertainty in South Asia.
The escalating geopolitical tensions involving the US and Iran, along with ongoing disruptions in global energy markets, have created a challenging environment for many economies in the region, it added.
