ADB Lowers India’s FY26 Growth Forecast to 6.7%
Why in the news
The Asian Development Bank trimmed its growth outlook for India, pointing to trade tensions, US tariffs and geopolitical uncertainty.
Forecasts
| Year | GDP growth | Inflation |
|---|---|---|
| FY2025-26 | 6.7% | 4.3% |
| FY2026-27 | 6.8% | 4.0% |
Key facts
- Earlier FY26 projection: 7%; new: 6.7%.
- US tariffs announced on 2 April are a major downside risk.
- ADB hinted at further downward revisions in July.
- Developing Asia-Pacific: 4.9% in 2025.
Concerns
- Tariffs and retaliation could cut trade and investment flows and add financial market volatility, hurting India, China and Southeast Asia.
- Global uncertainty may delay completion of investment projects, with capital flow and market stability worries.
- Extreme weather may hit agriculture and push up food inflation; a demand-supply mismatch could raise inflation expectations without structural reforms.
Cushions
- US-bound exports are about 2% of GDP.
- India-US trade deal talks may soften the tariff impact.
- Supportive monetary and fiscal policy, rising rural incomes and easing inflation help growth.
- Moody’s Ratings says tariffs will disrupt the China+1 strategy, but India may gain over the long term from trade diversion and relocations.
Exam angle
- Report: Asia Development Outlook, April 2025.
- Publisher: Asian Development Bank.
- FY26 forecast: 6.7% (down from 7%).