ADB retains India’s growth forecast at 7%, bets on govt spending, farm output

The Asian Development Bank (ADB) on Wednesday retained India’s growth forecast for the current fiscal at 7 per cent saying better farm output and higher government spending will boost economic activity.

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 per cent in FY2024 and 7.2 per cent in FY2025,” the ADB said, adding that India’s growth prospects remained robust.

The economy grew 8.2 per cent in the last fiscal year. The RBI projects growth to be 7.2 per cent in the current fiscal.

It said while GDP growth slowed to 6.7 per cent in the first quarter, it was expected to accelerate in the coming quarters with the improvement in agriculture and a largely robust outlook for industry and services.

“India’s economy has shown remarkable resilience in the face of global geopolitical challenges and is poised for steady growth,” ADB Country Director for India Mio Oka said.

“Agricultural improvements will enhance rural spending, which will complement the effects of robust performance of the industry and services sectors,” he added.

The report highlights that an above-average monsoon in most parts of the country will lead to strong agricultural growth, enhancing the rural economy in FY2024.

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

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