ADB raised India's GDP growth forecast 7.2%, up from 6.5% for FY2026

The Asian Development Bank (ADB) revised India’s Gross Domestic Product (GDP) forecast for FY2026 to 7.2%, up from 6.5%, stating a consumption boost in the Indian economy followed by recent tax cuts, upgraded after India's six-quarter high GDP growth of 8.2% in the second quarter of FY26.

ADB ups India's growth forecast to 7.2% for FY26, from earlier 6.5%

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Key Points:

• ADB revised India's GDP forecast for FY2026 to 7.2%

• Highlighted the strong private consumption in the last quarter

• Shows export increments to the US mostly driven by tariff-exempt sectors like smartphones and pharmaceuticals.

• ADB also revised India’s inflation rate to 2.6% from 3.1% previously due to reductions in GST rates and food price deflations which are supported by favourable agricultural growth.

• ADB kept its projection unchanged at 6.5% for FY2027 with 4.2% inflation.

Significance of the Report:

• The report highlights the strong economic development and resilience in the export sectors.

• Positive impact of reductions in Goods and Services Tax (GST), which boost private consumption.

• Also highlights the significant expansion observed in the manufacturing and service sectors of India.

• Favourable agricultural growth which validates India's robust economic growth and positive outlook amid global uncertainties. 

The revised GDP forecast by the RBI for FY 2026:

The revised forecast of ADB is in line with the Reserve Bank of India's raised growth projection for financial year 2026. Recently the RBI revised the GDP growth forecast for the financial year 2026 to 7.3% from 6.8% earlier, stating improvement in the manufacturing sector, healthy agricultural growth in the kharif crop production and improved global economic conditions compared to earlier. 

World Economic Outlook Report of International Monetary Fund (IMF):

The IMF, in its recent World Economic Outlook report, has projected India’s economy to grow at 6.6% in 2025-26, reaffirming its position as one of the fastest-growing emerging markets and developing economies. 

• It highlighted strong economic growth in the first quarter of FY26 performance. India will likely exceed China, which is projected to grow at 4.8%.

• The IMF stated that despite trade policy adjustments and global uncertainties, India’s domestic demand and resilient growth fundamentals continue to support its economic development.

• However, the IMF marginally lowered its 2026-27 forecast to 6.2%, anticipating a moderation in growth. Global growth is projected at 3.2% in 2025, slowing to 3.1% in 2026.

About the Asian Development Bank (ADB):

ADB is a leading multilateral development bank supporting sustainable, inclusive, and resilient growth across Asia and the Pacific regions, providing quality development solutions to solve the region’s complex challenges and supporting projects in developing member countries. 

• Established in 19th december 1966

• Its headquarters in Manila, Philippines

• It has 69 members, including 49 regional members from Asia and the Pacific region and 20 non-regional members from North America, Europe and other countries.

• In terms of financial commitments, India holds first rank with 14%, followed by China and Bangladesh, etc.

• ADB’s weighting of the voting system is distributed in proportion to members’ capital subscriptions; the largest shareholders are Japan (15.6%), the United States (15.6%), China (6.4%), India (6.3%) and Australia (5.8%).