ADB cuts India FY27 growth forecast to 6.6% on higher energy costs

India’s economy is expected to grow 6.6% in FY27, lower than the 6.9% forecast made in April, as higher oil prices and transportation costs 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 to remain supported by policy measures aimed at attracting foreign investment, fuel tax cuts, targeted credit support, robust services exports, and sustained public capital expenditure.

The outlook for FY28 remains unchanged from April, underpinned by improving global conditions and export competitiveness arising from trade agreements with various partners, noted ADB.

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

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

According to the National Statistical Office, India's gross domestic product (GDP) grew 7.7% in FY26.

The ADB revised its growth forecast for developing Asia and the Pacific to 4.9% for 2026 from 5.1% projected earlier, while leaving its 2027 forecast unchanged at 5.1%.

Albert Park, ADB chief economist, said, “Economic growth in developing Asia and the Pacific remains resilient, but persistent headwinds caused by the conflict require a careful policy balance between supporting growth and containing inflation.”

South Asia’s growth projection for 2026 was lowered by 0.3 percentage points to 6%, largely reflecting the downward revision to India’s outlook.

The ADB raised its FY26 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 FY27 inflation forecast at 4%, expecting fuel and food prices to moderate, aided by favourable base effects.

For the People’s Republic of China, the ADB left its growth forecasts unchanged at 4.6% for 2026 and 4.5% for 2027, supported by resilient exports and infrastructure investment.