New Delhi: The ADB maintained its forecast of 7 percent GDP growth for India in FY25 on Wednesday, attributing it to a strong performance in the industrial sector and high construction demand driven by housing.
The central government's fiscal position, which is stronger than anticipated, may help to further stimulate growth. ADB stated that the potential benefits should be balanced against the risks that may come from weather events and geopolitical shocks. The July forecast from ADB stated that the agriculture industry in India, projected to recover due to predictions of an above-average monsoon, will play a crucial role in maintaining economic growth in rural regions. It was reported that public investment continues to drive strong demand for investment.
Bank lending is driving strong demand for housing and boosting interest in private investments. ADB stated that services would continue to drive export growth, while merchandise exports would experience slower growth. The forward-looking services purchasing managers' index is stated to be significantly higher than its historical mean.
On Tuesday, the International Monetary Fund increased India's GDP growth forecast for FY25 to 7 percent, up by 20 basis points, in its latest update to the World Economic Outlook due to a rise in private consumption, particularly in rural regions. In its April outlook, ADB kept its forecast for India's GDP growth at 7.2 pc for FY26.
According to the National Statistical Office's provisional estimates, the GDP growth rate in FY24 reached 8.2 percent, surpassing the 7 percent growth rate in FY23, with the fourth quarter seeing a higher-than-anticipated growth of 7.8 percent.
The economy is expected to expand by 7.2 pc in FY25 as per the Reserve Bank of India's forecast. Last month, RBI Governor Shaktikanta Das stated that India is on the brink of a significant change in its growth trajectory. The nation is transitioning towards a direction where yearly GDP is heading.
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