The Asian Development Bank (ADB) revised India’s growth outlook for the current financial year, anticipating a surge to 6.7 percent from its initial forecast of 6.3 percent. This upgrade follows a robust second quarter that witnessed an impressive 7.6 percent GDP growth, propelling the overall expansion in the April-September period to a strong 7.7 percent, as per the Asian Development Outlook December 2023.
The report highlights a remarkable performance in the industrial sector, marked by substantial growth across manufacturing, mining, construction, and utilities, all registering double-digit expansions. While agricultural growth might be slightly slower than expected for FY24, the report foresees a compensatory effect from the exceptional performance of the industrial segment.
Examining the demand side, the projection suggests an increase in fixed investment propelled by amplified capital spending by both central and state governments, compensating for relatively subdued growth in private consumption and weaker-than-anticipated exports.
In a parallel trend, the Reserve Bank of India (RBI) also revised its growth forecast for FY24 to 7 percent, an upward shift from its earlier projection of 6.5 percent, aligning with the ADB’s optimistic outlook.
Looking ahead to FY25, the ADB has maintained a consistent growth forecast of 6.7 percent. The report acknowledges India’s accelerated growth of 7.1 percent in the initial three quarters of the calendar year, largely driven by robust industrial production and increased investments.
However, the report also notes the fading boost from the post-pandemic reopening in Southeast Asian economies and subdued merchandise goods exports from high-income technology exporters, despite signs of stabilization. Inflation forecasts for FY24, both from the ADB and RBI, remain at 5.5 percent and 5.4 percent, respectively, in line with recent data and expectations.
