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ADB Raises India’s FY26 Growth Forecast to 7.2%
📅 Published 11 Dec 2025 · December 2025
The Asian Development Bank (ADB) raised India’s GDP growth forecast for FY26 to 7.2%, up 70 basis points from its earlier estimate of 6.5%, citing strong domestic consumption supported by recent tax cuts. The growth projection for FY27 remains unchanged at 6.5%.
Key Highlights:
- Q2FY26 GDP Growth: 8.2% (July–September 2025), fastest in six quarters.
- Drivers: Robust private consumption; moderate government spending.
- FY26 Upgrade: 0.7 percentage points to 7.2% due to strong domestic demand and tax reductions.
- Global Sentiment: Aligns with other agencies:
- IMF: Praised India’s growth momentum and fiscal discipline.
- Fitch Ratings: Upgraded FY26 growth forecast to 7.4% from 6.9%, citing stronger consumer spending and GST reforms.
- Inflation Outlook:
- FY26: 2.6% (down from 3.1%)
- FY27: Expected to rise near RBI target of 4.2%
- Retail inflation in October fell to 0.3%, lowest since 2012
- Factors Behind Low Inflation: GST cuts, food price deflation, strong agricultural output, favourable weather.
FY26 Growth Forecast Comparisons
| Institution | Earlier Forecast (%) | Revised Forecast (%) |
|---|---|---|
| ADB | 6.5 | 7.2 |
| Fitch | 6.9 | 7.4 |
| Crisil | 6.5 | 7.0 |
| SBI Research | 6.3 | 7.6 |
| CareEdge | 6.9 | 7.5 |
| IDFC Bank | 6.8 | 7.6 |
| Kotak Mahindra | 6.5 | 7.8 |
📝 Relevant Exams:
UPSC