ADB revises India’s growth forecast for FY26 upwards to 7.2%

The Asian Development Bank (ADB) on Wednesday revised India’s growth forecast for FY26 upwards to 7.2% from 6.5%.

The revision was driven primarily by robust domestic consumption supported by recent tax cuts.

Advertisement

India’s 2025 growth projection is raised to 7.2%, reflecting stronger second-quarter expansion as tax cuts supported consumption, ADB’s Asian Development Outlook, December 2025 said.

It further said the sharp upgrade of 0.7 percentage points of the Indian economy will help Asia to grow at a faster pace of 5.1% as compared to the earlier projection of 4.8% for 2025.

The strong growth is attributable to robust expansion of the manufacturing and services sectors on the supply side and consumption and investment on the demand side, ADB said.

ADB, however, retained the FY27 forecast at 6.5%.

“Following stronger-than-anticipated growth in Q3, India’s 2025 growth projection is upgraded by 0.7 percentage points to 7.2%, driven primarily by robust domestic consumption supported by recent tax cuts,” it said.

ADB said the stronger-than-expected consumption demand, helped by a robust rural economy, the impact of GST rate cuts, and steady credit growth, will support growth.

On the supply side, domestic industrial demand will be tempered by muted goods exports and strong imports. The services sector, which has grown by 9.3% in the first half of FY2026, will continue to grow strongly, helped by robust domestic and external demand, it added.

Notably, during the second quarter ending September, India logged a six-quarter high GDP growth of 8.2% compared to 7.8% recorded in the first quarter. India has achieved an 85% growth rate in the first half of the current financial year.

The Reserve Bank raised the GDP growth projection to 7.3% for the current fiscal from its earlier estimate of 6.8% following robust economic performance in the July-September quarter.