India’s economic growth is projected at a moderate 6.6 per cent in FY2026-27, down from the 6.9 per cent forecast in April, as higher crude oil and transportation costs dampen consumer spending and private demand, the Asian Development Bank (ADB) said in the July edition of its Asian Development Outlook.
Despite the downward revision, ADB’s estimate remains above the International Monetary Fund’s (IMF) latest projection of 6.4 per cent for FY2026-27, reinforcing expectations that India will continue to be among the fastest-growing major economies.
The multilateral lender said elevated energy prices are reducing household purchasing power, resulting in weaker consumption. It also flagged geopolitical tensions and the possibility of weather-related disruptions to agriculture as key downside risks to the growth outlook.
ADB, however, believes several policy measures will help cushion the impact. It expects growth to be supported by efforts to attract foreign investment, reductions in fuel taxes, targeted credit initiatives, robust services exports and continued public capital expenditure.
Looking ahead, the bank retained its FY2027-28 growth forecast for India at 7.3 per cent, unchanged from its earlier estimate and higher than the IMF’s 6.7 per cent projection. The stronger outlook is based on expectations of improving global conditions and enhanced export competitiveness through trade agreements with key partners.
On inflation, ADB revised its FY2026-27 forecast upward to 5.2 per cent, compared with 4.5 per cent estimated in April, citing persistent pressure from higher oil and food prices as well as the impact of a weaker rupee. The inflation forecast for FY2027-28 was left unchanged at 4 per cent.
The report also revised the broader regional outlook. Growth across South Asia is now expected to slow to 6.0 per cent in 2026 from the earlier estimate of 6.3 per cent, amid rising energy costs, higher freight charges and uncertainty over remittance inflows.
For developing Asia and the Pacific, ADB lowered its 2026 growth forecast to 4.9 per cent from 5.1 per cent. It said the prolonged conflict in West Asia has disrupted energy supplies and global supply chains, increasing production costs and weighing on economic activity across the region.