Economy: After the IMF, ADB keeps India’s GDP growth at 7% in FY25
Virendra Pandit
New Delhi: After the International Monetary Fund (IMF) projected India’s GDP growth for 2024-25 at 7 percent, the Asian Development Bank (ADB) also on Wednesday kept the country’s growth projection unchanged at 7 percent, citing robust expansion in the industrial sector and strong demand in construction led by housing.
“The stronger-than-expected fiscal position of the central government could provide a further boost to growth. However, this must be weighed against downside risks arising from weather events and geopolitical shocks,” said ADB, according to the media reports.
ADB’s July outlook said India’s agriculture sector, which is expected to rebound with forecasts for an above-normal monsoon, will be important to sustain economic growth in rural areas. Investment demand led by public investment remains strong.
“Bank credit is fueling robust housing demand and improving private investment demand. However, export growth will continue to be led by services, with merchandise exports showing relatively weaker growth,” it said.
The forward-looking services purchasing managers’ index is well above its long-term average.
The IMF also on Tuesday raised India’s GDP growth projection for FY25 by 20 basis points to 7 percent in its update to the World Economic Outlook amid a boost in private consumption, especially in rural areas.
For FY26, ADB kept India’s GDP growth projection at 7.2 percent, as stated in its April outlook.
The GDP expanded at 8.2 percent in FY24, higher than 7 percent recorded in the year before, aided by a greater-than-expected expansion of 7.8 percent in the fourth quarter of FY24, according to the provisional estimates released by the National Statistical Office.
The Reserve Bank of India (RBI) has projected the economy’s growth at 7.2 percent in FY25. India is at the threshold of a “major structural shift” in its growth trajectory, said RBI Governor Shaktikanta Das in June. The South Asian country is moving towards a path where annual GDP growth of 8 percent can be sustained for long, he added.
ADB slightly raised its growth forecast for developing Asia and the Pacific for 2024 to 5 percent from a previous projection of 4.9 per cent, as rising regional exports complement resilient domestic demand. The growth outlook for 2025 is maintained at 4.9 per cent.
