Overview
- ADB raised India’s FY26 GDP outlook by 0.7 percentage points to 7.2%, citing a stronger-than-expected domestic demand impulse.
- India’s GDP expanded 8.2% in Q2 FY26, the fastest in six quarters, following GST rate reductions and earlier income tax cuts that boosted spending.
- The bank left India’s FY27 growth projection unchanged at 6.5%, signaling expectations of a moderation after the current year’s strength.
- Risks flagged include slower growth as central government capital spending is curbed for fiscal consolidation and potential export headwinds from higher US tariffs.
- ADB lowered India’s FY26 inflation forecast to 2.6% after headline inflation dipped to about 0.3% in October, and it lifted developing Asia’s 2025 growth projection to 5.1% with India a key driver.