New Delhi, Apr 10 (KNN) The Asian Development Bank (ADB) has projected India’s economic growth to remain robust at 6.9 percent in FY2026-27, with an acceleration to 7.3 percent in the following fiscal year, supported by strong domestic demand and improving financial conditions.
Growth Outlook And Key Drivers
In its latest Asian Development Outlook report, the multilateral lender highlighted that easing financing conditions and relatively lower US tariffs on Indian goods are expected to support growth momentum, reported PTI.
However, ADB cautioned that a prolonged conflict in West Asia could pose risks to India’s macroeconomic stability through higher energy prices, trade disruptions, and weaker remittance inflows, given the region’s importance to India’s external sector.
The report noted that India’s economy expanded by 7.6 percent in FY2025-26, up from 7.1 percent in the previous fiscal, driven by resilient household consumption, tax cuts, GST rationalisation, and lower food prices, along with sustained public investment.
Inflation Trends And Risks
On inflation, ADB projected a rise to 4.5 percent in FY2026-27 from 2.1 percent in the previous fiscal, citing a rebound in food prices, elevated global oil prices, currency depreciation, and higher precious metal prices. Inflation is expected to moderate to around 4 percent in FY2027-28 as oil prices ease.
While rising inflation, particularly in food and fuel, may dampen private consumption in the near term, growth is expected to strengthen in the subsequent fiscal on the back of increased government spending, salary and pension hikes, and improved investment activity supported by regulatory reforms.
The report also pointed to potential gains from trade agreements with the European Union, which are likely to bolster export demand going forward.
ADB further warned that higher global oil prices amid the West Asia crisis could widen the current account deficit and increase input costs, thereby weighing on growth.
It added that the overall impact would depend on the extent of pass-through to domestic fuel prices, with limited pass-through potentially cushioning inflation but increasing fiscal pressures due to higher subsidy requirements.
(KNN Bureau)
2012-01-26
