ADB Revises India Growth Outlook; FY27 Forecast at 7%, FY28 at 7.1%

The Asian Development Bank (ADB) has raised its India growth forecast for FY27 to 7% from 6.6% earlier. According to a Business Standard news report the revised estimates were published in its September 2026 Asian Development Outlook. 

For FY28, ADB has cut its forecast to 7.1% from 7.3%. The lower estimate for the following year is mainly due to the higher growth expected in FY27, according to the report. 

Q1 GDP Growth 

The revision follows India’s 7.8% year-on-year GDP growth in Q1 FY27. Services grew 10%, with financial, real estate and professional services recording 12.1% growth during the quarter. 

Manufacturing grew 9.2%, helped by electronics, textiles, and rubber and plastics. Gross fixed capital formation increased 11.9%, its highest growth in four years. Exports of goods and services rose 12%. 

Investment and Exports 

ADB expects investment to remain firm, with public capital spending, lower interest rates and corporate balance sheets supporting activity. The RBI reduced the repo rate by 125 basis points between February and December 2025. 

The weighted average lending rate on fresh rupee loans fell 80 basis points between February 2025 and June 2026. The rate on outstanding rupee loans declined by 91 basis points over the same period. 

Private investment is expected to continue in sectors such as data centres and energy. Electronics exports are also expected to remain steady, while services exports could benefit from demand for technology services linked to artificial intelligence. 

Inflation Forecast 

ADB has lowered its FY27 inflation forecast to 5% from 5.2%. Its FY28 inflation forecast remains unchanged at 4%. 

The lender said lower-than-expected transmission of higher global energy prices to retail consumers led to the FY27 revision. It expects energy prices to ease and agricultural supplies to recover, assuming normal monsoon conditions. 

Risks to Outlook 

ADB has identified West Asia tensions and El Nino-related weather changes as risks. Rainfall was 14.7% below normal as of September 13, with larger deficits in central and southern India. 

The shortfall could affect kharif crops including rice, pulses and oilseeds. Lower reservoir levels and higher temperatures could also affect rabi crops, while higher input costs may weigh on industrial growth. 

Read More: UPI Merchant Transactions Largely Unaffected by GST on MDR, Confirms NPCI! 

Conclusion 

The FY27 growth forecast has been raised following stronger first-quarter activity, investment and exports. For FY28, ADB has lowered its estimate to 7.1%, while weather and geopolitical risks remain part of the outlook. 

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