Chennai: Both the International Monetary Fund and Asian Development Bank have projected India to grow by 7 per cent in FY25. While the IMF has revised its estimate upward by 0.2 percentage points from its April forecast, ADB has retained its previous projection.
“The forecast for growth in India has been revised upward by 0.2 percentage points, to 7 per cent, this year, with the change reflecting carryover from upward revisions to growth in 2023 and improved prospects for private consumption, particularly in rural areas,” IMF said in its July update. In its April update, the IMF had raised its forecast for the country to 6.8 per cent against 6.5 per cent predicted earlier.
The GDP growth forecast for FY26 has been retained at 6.5 per cent. The IMF also has revised the forecast for growth in emerging markets and developing economies upward. The projected increase is powered by stronger activity in Asia, particularly China and India, it said.
Meanwhile, ADB has retained its growth projection for FY25 and FY26 at 7 per cent and 7.2 per cent, respectively.
“Services continued to expand robustly in Q4 of FY2023, and the forward-looking services PMI is well above its long-term average. Industry is also expected to grow robustly, driven by manufacturing and strong demand for construction led by housing. After muted growth in FY2023, a rebound in agriculture is expected given the above-normal monsoon projections,” ADB said.
This is notwithstanding the slower advance of the monsoon in June. A rebound in agriculture will be important to sustain growth momentum in rural areas. Investment demand continues to be strong, led by public investments. Bank credit is fuelling robust housing demand and improving private investment demand.
However, export growth will continue to be led by services, with merchandise exports showing relatively weaker growth. The stronger-than-expected fiscal position of the central government could provide a further boost to growth. However, this must be weighed against downside risks arising from weather events and geopolitical shocks, it added.
Though India’s economic growth decelerated to 7.8 per cent in Q1, it remains the fastest in the region.
ADB has also retained the inflation forecast for India at 4.6 per cent in FY25 and 4.5 per cent in FY26. Talking about inflation in Asia, ADB said that rice prices, which were up sharply since late 2023, remain relatively high, driven by tight supply from El Niño effects and continued export restrictions from India.
