The Asian Development Bank has increased its growth outlook for India, citing strong first-quarter results, rising domestic demand, and supportive fiscal policies, with projections now reaching 7% for FY2026-27 and 7.1% for FY2027-28.
The Asian Development Bank has upgraded India’s growth outlook for the current fiscal year, saying the economy is now on track to expand by 7% in FY2026-27, up from its earlier estimate of 6.6%, after a stronger-than-expected first quarter and signs that domestic demand remains firm. In its Asian Development Outlook update for September 2026, the Manila-based lender said India’s economy grew 7.8% year on year in the April-to-June period, helped by investment, consumption and gains in manufacturing and services.
The bank also lifted its forecast for FY2027-28 to 7.1%, although that is slightly below its previous 7.3% projection because of the stronger base created by the revised outlook for the current year. According to the report, domestic demand should remain the main engine of growth over both years, supported by healthy tax revenues, relatively low interest rates, rising household incomes and an expected increase in government salaries and pensions in FY2027-28.
ADB country director for India Mio Oka said the economy has continued to show resilience despite supply disruptions and elevated commodity prices, pointing to infrastructure spending and supportive fiscal and monetary policy as key buffers. The bank said services, including artificial intelligence-related investment, should stay strong, while better farm productivity and steady manufacturing growth could help sustain momentum. It also noted that central government capital spending rose 29.9% in the first quarter of FY2026-27 and remains on course to meet its annual target.
On inflation, ADB trimmed its FY2026-27 forecast to 5% from 5.2%, while leaving its FY2027-28 estimate unchanged at 4%. The lender said price growth should stay within the Reserve Bank of India’s target band, although higher pressure on prices could still prompt the central bank to consider a repo-rate increase. It warned that geopolitical uncertainty and weather disruption linked to El Niño remain risks, especially for agriculture and industrial input costs, but said services and construction should continue to provide support. The upward revision follows similar moves by Fitch Ratings and S&P Global, which have also raised India growth forecasts on the back of resilient consumption and industrial activity.
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