The Asian Development Bank has projected India’s GDP growth at 6.9% for FY 2026–27 (FY27), with an expected rebound to 7.3% in FY28, according to its April 2026 Asian Development Outlook.
Growth Outlook and Key Drivers
India is expected to remain one of the fastest-growing major economies, supported by:
- Strong private consumption
- Continued public infrastructure spending
- Improving corporate balance sheets
Additionally, growth in FY27 is likely to benefit from:
- Government salary and pension hikes, boosting household demand
- Structural reforms
- Potential trade agreement with the European Union, aiding exports
Moderation in FY27 Growth
- FY27 growth: 6.9%
- FY26 growth (estimated): 7.6%
The slowdown reflects:
- Global economic headwinds
- Weakening export momentum
However, growth is expected to recover in FY28 due to stronger domestic demand and investment.
Inflation Outlook
- FY27 inflation forecast: 4.5%
- FY28 inflation forecast: 4.0%
Key factors driving inflation:
- Higher crude oil and gas prices
- Depreciation of the rupee
- Increased demand from salary and pension revisions
External Sector Outlook
- Current Account Deficit (CAD):
- Expected to widen in FY27 due to costly energy imports and slower remittances
- Likely to narrow in FY28 as oil prices stabilise and exports improve
- Supported by strong foreign exchange reserves of around $728.5 billion
Risks to Growth
ADB highlighted several downside risks:
- Geopolitical tensions, especially in West Asia
- Rising energy prices
- Supply chain disruptions
- Slower external demand and remittances
A prolonged conflict could increase inflation and impact economic stability.
Sectoral Support
Despite risks, India’s economy is supported by:
- Services sector growth (around 9% in FY25)
- Recovery in manufacturing sector
These provide a broad-based foundation for growth.
Conclusion
The ADB’s outlook reflects a balanced view of India’s economic trajectory—short-term moderation due to global challenges, followed by recovery driven by domestic demand, reforms, and external trade opportunities. India continues to stand out as a resilient and fast-growing economy globally.