ADB retains India's growth forecast at 7%; govt spending, agriculture to boost economy

Asian Development Bank retains India's 7% growth forecast for FY2024, expecting acceleration with improved farm output and government spending.

The Asian Development Bank (ADB) on Wednesday (September 25, 2024) retained India's growth forecast for the current fiscal at 7% and said that the economy is expected to accelerate in the coming quarters on improved farm output, and higher Government spending.

In its Asian Development Outlook (ADO) update of September, the ADB said exports in the current fiscal will be higher than earlier projected, led by larger services exports. However, merchandise export growth will be relatively muted through the next fiscal.

"GDP growth is expected at 7% in fiscal year 2024 (FY2024, ending 31 March 2025) and 7.2% in FY2025, both as forecast in ADO April 2024," the ADB said, adding that India's growth prospects remain robust.

The Indian economy grew 8.2% in the last fiscal (2023-24). The RBI projects growth to be 7.2% in the current fiscal.

It said while GDP growth slowed to 6.7% in the first quarter (April-June) of FY2024, it is expected to accelerate in the coming quarters with improvement in agriculture and a largely robust outlook for industry and services.

Private consumption is expected to improve, driven by rural consumption fuelled by stronger agriculture and by already robust urban consumption.

The outlook for private investment is upbeat, but growth in public capital expenditure, heretofore high, will moderate in FY2025.