New Delhi: The Asian Development Bank (ADB) on Wednesday maintained its GDP growth forecast for India at 7 percent for the current financial year, anticipating a rebound in agriculture due to above-normal monsoon projections, according to media reports.
This forecast comes a day after the International Monetary Fund (IMF) raised its GDP growth projection for India to 7 percent, up from the 6.8 percent estimated in April.
Last month, the Reserve Bank of India (RBI) also revised its growth forecast upward to 7.2 percent, from the earlier estimate of 7 percent.
The July edition of the Asian Development Outlook (ADO) reiterated that the Indian economy is on track to grow by 7 percent in FY2024 (ending March 31, 2025) and 7.2 percent in FY2025.
The Indian economy achieved a growth rate of 8.2 percent for the financial year ending March 2024, up from 7 percent in the previous fiscal year.
The services sector continued to expand robustly in Q4 of FY24, with the forward-looking services PMI well above its long-term average. Additionally, the industry is expected to grow robustly, driven by manufacturing and strong demand for construction, particularly in the housing sector.
"After muted growth in FY2023 (previous fiscal), a rebound in agriculture is expected given the above-normal monsoon projections. This is notwithstanding the slower advance of monsoon in June. A rebound in agriculture will be important to sustain growth momentum in rural areas," it said.
Investment demand remains strong, driven by public investments and robust housing demand fueled by bank credit, which is also enhancing private investment demand. However, export growth is expected to be led by services, with merchandise exports showing relatively weaker growth.
The stronger-than-expected fiscal position of the central government could further boost growth. Nonetheless, this potential boost must be weighed against downside risks from weather events and geopolitical shocks.
Regarding inflation, the Asian Development Outlook (ADO) has retained its forecast at 4.6 percent for the current financial year, expecting it to slightly decline to 4.5 percent next fiscal year.
For developing Asia, ADO revised the growth forecast to 5 percent in 2024 and maintained it at 4.9 percent for 2025. The growth projections remain broadly unchanged from the ADO April 2024 report, supported by resilient domestic demand, improved exports, and manufacturing.
The region's 2024 growth forecast was marginally adjusted up by 0.1 percentage points due to upward revisions in the Caucasus, Central Asia, and East Asia.
Meanwhile, the inflation forecast for the region has fallen to 2.9 percent in 2024, mainly due to downward revisions in China and the Caucasus and Central Asia, which offset a slight increase in South Asia.
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