ADB increases India’s growth forecast for 2024-25 to 7%, predicts decrease in inflation

The Asian Development Bank (ADB) has raised India’s GDP growth forecast to 7 per cent for the 2024-25 financial year, citing strong investment and improving consumer demand. The ADB also expects a decrease in India’s inflation rate going forward. The ADB’s growth forecast aligns with the IMF and World Bank’s estimates, reflecting a positive outlook on India’s economy.

According to the April edition of the Asian Development Outlook, the Indian economy performed robustly in fiscal 2023, driven by manufacturing and services. The growth momentum is expected to continue, primarily fueled by robust investment and consumption demand. Inflation is projected to follow global trends and continue its downward trajectory.

For the 2025-26 fiscal year, the ADB forecasts India’s growth at 7.2 per cent. The report suggests that exports may remain subdued in the current fiscal due to slower growth in major advanced economies, but are likely to improve in the following year. To enhance exports in the long term, greater integration into global value chains is deemed necessary.

India’s foreign exchange reserves have reached a record high of $645.58 billion, providing a strong foundation to finance imports for almost a year. The country’s macroeconomic fundamentals have strengthened, with the fiscal deficit under control and robust tax collections contributing to stable economic growth. The government’s focus on large infrastructure projects like highways and ports has accelerated GDP growth.

Inflation has reduced to around 5 per cent and is expected to decline further, setting the stage for stable economic growth in the coming years. The combination of supportive monetary policies, controlled fiscal deficit, and increased government investments has bolstered India’s economic prospects amid global uncertainties.