Asian Development Bank (ADB) has updated its outlook for India’s economy, painting a picture of resilience with some near-term challenges. India’s GDP growth for FY27 is now projected at 6.9%, higher than the earlier estimate of 6.5%. However, this marks a slowdown compared to FY26, mainly due to global uncertainties and elevated energy prices. External pressures such as weaker exports and inflationary trends are expected to weigh on the economy in the short run.
On inflation, ADB has raised India’s FY27 consumer price index (CPI) forecast by 30 basis points to 4.5%, reflecting the impact of higher energy costs. By FY28, inflation is expected to ease to 4% as supply conditions improve and energy prices normalise.
The current account deficit (CAD) is also likely to widen in FY27, driven by heavy crude oil imports. Encouragingly, ADB expects the CAD to narrow in FY28 as global energy prices stabilise.
Looking ahead, India’s growth momentum is set to strengthen again in FY28, with GDP projected to rise to 7.3%. This rebound will be supported by strong domestic demand and increased public investment, highlighting India’s ability to navigate external shocks while maintaining a robust growth trajectory.
In short, FY27 may bring headwinds, but FY28 promises renewed strength for India’s economy.
