ADB cuts India FY27 growth forecast to 6.6% on higher oil prices

New Delhi: The Indian economy is expected to grow 6.6% this fiscal year, lower than the 6.9% forecast made in April, as higher crude oil prices due to the Iran war and transportation costs would weigh on consumer sentiment and private demand, said the Asian Development Bank (ADB) in its latest outlook.

The ADB, however, retained its FY28 growth forecast at 7.3%.

"The FY27 forecast is lowered from 6.9% projected in April, reflecting elevated energy prices, which squeeze real incomes," the multilateral lender said.


The ADB expects India's growth momentum to be supported by policy measures aimed at attracting foreign investment, besides fuel tax cuts, targeted credit support, robust services exports, and sustained public capital expenditure.

The FY28 GDP projection remains unchanged from April, underpinned by improving global conditions and export competitiveness arising from India's trade agreements with various partners, it said.

"However, risks tilt to the downside driven by heightened geopolitical tensions, or weather-induced weakness in agriculture," it said.

The International Monetary Fund (IMF) Wednesday marginally lowered India's FY27 growth forecast to 6.4% from 6.5% projected in April, while noting that the country remains among the world's fastest-growing major economies.

According to the National Statistical Office, India's GDP grew 7.7% in FY26.

The ADB raised its FY27 inflation forecast for India to 5.2% from 4.5%, citing higher oil prices, a weaker rupee, and rising food prices due to heatwaves and the fading impact of favourable base effects. It retained the FY28 inflation forecast at 4%, expecting fuel and food prices to moderate, aided by favourable base effects.