Business EconomyPosted at: Sep 23 2026 12:52PM

New Delhi, Sep 23 (UNI) The Asian Development Bank (ADB) has raised its growth forecast for the Indian economy for FY27 to 7 per cent, up from the 6.6 per cent estimate it made earlier, citing stronger investment activity and continued strength in services exports.
In its September 2026 Asian Development Outlook, released on Wednesday, the multilateral lender said the Indian economy has remained resilient despite geopolitical uncertainty and elevated commodity prices. However, it trimmed its growth projection for FY28 to 7.1 per cent from 7.3 per cent earlier.
The latest upgrade comes after India posted stronger-than-expected economic growth in the first quarter of FY27. GDP expanded 7.8 pc year-on-year during the April-June quarter, with services, manufacturing and investment providing key support.
Services continued to be a major contributor to economic activity, registering 10 pc growth in the first quarter. Financial, real estate, and professional services recorded a particularly strong expansion of 12.1 pc.
Manufacturing growth also remained robust at 9.2 pc, helped by sectors including electronics, textiles and rubber and plastics.
Investment activity strengthened further during the quarter. Gross fixed capital formation rose 11.9 pc, marking its fastest pace of growth in four years. ADB attributed the momentum to a combination of public spending and improved private-sector investment.
Exports also added to growth, with exports of goods and services increasing 12 pc during the quarter.
ADB expects investment to continue supporting India's economic expansion. Relatively lower interest rates, higher government capital expenditure and healthy corporate balance sheets are expected to encourage companies to maintain spending.
Private investment is likely to remain concentrated in sectors with strong long-term demand, including data centres and energy, where project pipelines remain substantial.
The lender also expects exports to remain supportive despite uncertainty surrounding global trade. Electronics exports are expected to maintain momentum, while India's services exports could benefit from rising demand for technology-related services linked to artificial intelligence development.
ADB said India's trade agreements with the United Kingdom and the European union could provide additional support to net exports in FY28.
Alongside the growth upgrade, ADB lowered its inflation projection for India in FY27 to 5 pc from 5.2 pc estimated in July.
The revision reflects a lower-than-expected impact of elevated global energy prices on domestic retail prices. According to ADB, government measures, including tax reductions and other buffers, have helped contain the transmission of higher energy costs to consumers.
For FY28, the inflation forecast remains unchanged at 4 pc. The projection assumes moderation in energy prices and an improvement in agricultural supplies following a normal monsoon.
However, ADB expects price pressures to build during the second half of FY27. The impact of earlier GST rate reductions is expected to diminish, while higher input costs could gradually feed into consumer prices.
ADB cautioned that India's growth outlook remains exposed to external and weather-related risks.
Continued geopolitical tensions, particularly in the Middle East, could push up commodity prices and weigh on economic activity. Weather volatility linked to El Niño is another concern.
The lender warned that a delayed withdrawal of the monsoon and higher temperatures could result in post-harvest losses and affect rabi crop production. The risk is heightened by reservoir levels being lower than they were a year earlier.
Despite these risks, ADB's latest projections point to continued economic momentum in India, supported by investment, services activity, manufacturing and exports.
UNI VK RSA