ADB Increases India's GDP Growth Forecast to 7.2% from 6.5% for FY26

As per PTI report, The Asian Development Bank (ADB) has revised its forecast for India's GDP growth in FY26, increasing it to 7.2%. This adjustment is primarily due to robust domestic consumption, bolstered by recent tax cuts. 

Factors Contributing to the Revised Growth Forecast 

On December 10, 2025, ADB announced an upward revision of India's GDP growth forecast for FY26 to 7.2%, up from the previous estimate of 6.5%. This change is largely attributed to strong domestic consumption, supported by recent tax cuts. During the second quarter ending in September, India recorded a GDP growth of 8.2%, marking a 6-quarter high. 

The manufacturing and services sectors have shown significant expansion on the supply side, while consumption and investment have driven demand. The Reserve Bank of India (RBI) also raised its GDP growth projection for the current fiscal year to 7.3%, reflecting robust economic performance in the July-September quarter. 

Projected Economic Trends for the Second Half of FY26 

Despite the strong growth in the 1st half, growth is expected to moderate in the 2nd half of FY26. The central government's capital spending is anticipated to ease amid fiscal consolidation, and export growth may soften due to elevated US tariffs affecting select Indian exports.  

However, stronger-than-expected consumption demand, aided by a robust rural economy, GST rate cuts, and steady credit growth, will continue to support growth. 

Read More: Fitch Raises India FY26 Growth Forecast to 7.4% on High Consumer Spending! 

Inflation and Supply-Side Dynamics 

Inflation is projected to ease in FY26, with the forecast revised down to 2.6% from 3.1% in September. This moderation is due to lower-than-expected food prices, favourable monsoon conditions, and strong monsoon crop output.  

The services sector, which grew by 9.3% in the first half of FY26, is expected to continue its strong performance, driven by robust domestic and external demand. 

Conclusion 

The ADB's revised GDP growth forecast for India in FY26 reflects strong domestic consumption and favourable economic conditions. While growth is expected to moderate in the second half, factors such as GST rate cuts and a robust rural economy will continue to support economic expansion. Inflation is also projected to remain subdued, contributing to a stable economic environment. 

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