New Delhi: The Asian Development Bank (ADB) on Thursday raised India’s GDP growth forecast for 2024-25 to 7 per cent as it expects public and private sector investment along with a gradual improvement in consumer demand to boost the growth rate. Is. ADB in December had estimated India’s economic growth rate to be 6.7 percent for the financial year 2024-25.
“The Indian economy grew strongly in fiscal 2023, with strong momentum in manufacturing and services. It will continue to grow rapidly over the forecast horizon. Growth will be driven mainly by strong investment and recovery in consumption demand. Inflation will continue to trend downward.” ” Global Trends,” says the April edition of the Asian Development Outlook.
For the financial year 2025-26, ADB has estimated India’s growth rate to be 7.2 percent. The multilateral body said exports are likely to remain relatively low this fiscal year as growth has slowed in major advanced economies but will improve in fiscal 2025.
“Monetary policy is expected to remain growth-supportive with low inflation, while fiscal policy aims for consolidation, but support for capital investment remains intact. Overall, growth is projected to slow to 7 per cent in 2024-25.” but is projected to improve to 7.2 per cent by 2025-26,” it said. The report said India needs greater integration into global value chains to boost exports in the medium term.
The increase in ADB’s growth forecast is in line with the IMF and the World Bank, which have also raised their projections for India’s growth, with a strong growth rate of 8.4 percent in the October-December quarter. The country’s exports have also increased despite shipping disruptions due to geopolitical tensions in the Red Sea region. India’s foreign exchange reserves hit a historic high of $645.58 billion in the week ended March 29 and are enough to finance up to 11 months of imports.
The macroeconomic fundamentals of the economy have strengthened with fiscal deficit under control following strong tax collections. Lower fiscal deficit will help control inflation as well as leave more money in the banking system for corporates to borrow for investment as the government needs to borrow less.
Large government investments in large infrastructure projects such as highways, ports and harbors have driven GDP growth, making India a bright spot amid the global recession. Inflation has declined to around 5 per cent and is expected to decline further, paving the way for further stable economic growth.
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2024-04-12 00:22:22