ADB Lowers India's FY27 Growth Forecast to 6.6% Amid Rising Oil Prices

The Asian Development Bank (ADB) has revised India's FY27 economic growth forecast to 6.6% in the July edition of its Asian Development Outlook, lowering its earlier estimate of 6.9% released in April. 

Even after the downgrade, ADB's projection remains above the International Monetary Fund's (IMF) forecast of 6.4% for FY27. 

Rising Costs Weigh on Growth 

ADB attributed the downward revision to elevated oil prices and higher transportation costs, which have reduced household purchasing power and weakened private consumption. 

The lender also flagged geopolitical tensions and weather-related weakness in agriculture as key downside risks that could further affect India's economic performance. 

Support Factors Remain Intact 

Despite trimming its forecast, ADB expects India to remain among the world's fastest-growing major economies. 

According to the lender, growth will continue to receive support from measures to attract foreign capital, fuel tax cuts, targeted credit support, strong services exports and public capital expenditure. 

For FY28, ADB retained its growth forecast at 7.3%, unchanged from April and higher than the IMF's estimate of 6.7%. It said improved global conditions and stronger export competitiveness arising from trade agreements are expected to support growth. 

Inflation Projection Revised Higher 

ADB has increased India's FY27 inflation forecast to 5.2%, up from 4.5% projected earlier.

The upward revision reflects the impact of higher oil prices, rising food costs and a weaker rupee. However, the lender retained its FY28 inflation forecast at 4%. 

Regional Outlook Also Softens 

Beyond India, ADB lowered its 2026 growth forecast for South Asia from 6.3% to 6.0%, citing higher oil prices, rising freight costs and uncertainty surrounding remittance flows. 

It also reduced its 2026 growth projection for Developing Asia and the Pacific from 5.1% to 4.9%, stating that the prolonged conflict in West Asia has disrupted energy supplies and supply chains, increasing production costs and slowing economic activity. 

Read More: India's Energy Storage Requirement to Reach 888 GWh by 2035-36: Report! 

Conclusion 

ADB has moderated India's FY27 growth outlook while raising its inflation forecast amid rising energy and food costs. Even so, it expects India to remain one of the fastest-growing major economies, supported by policy measures, exports and public investment.   

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