ADB lowers India's GDP growth forecast to 6.5 pc for FY25

NEW DELHI: The Asian Development Bank (ADB) Wednesday scaled down India's GDP growth projection for this fiscal year to 6.5% from 7%, citing lower-than-expected industrial growth amid sluggish government spending.

The multilateral lender also lowered its growth forecast for 2025-26 to 7% from 7.2% earlier, attributing subpar increase in private investment and impact of tight monetary policy on housing demand.

The Indian economy continues to face downside risks from geopolitical threats to supply chains and adverse weather conditions, according to ADB. "The forecast for FY2025 has been reduced slightly due to lower-than-expected growth in private investment and housing demand, due to tight monetary policy aimed at combating inflation," the Manila-headquartered lender said in its December outlook.


The revised forecast comes as India's fiscal second-quarter growth slowed more than expected, with industrial output rising just 3.6% year-on-year. Growth in agriculture and services sectors has remained strong at 3.5% and 7.1%.

The downward revision in ADB's forecast tracks the Reserve Bank of India lowering India's economic growth projection to 6.6% from 7.2% for FY25 on December 6.

Meanwhile, S&P Global Ratings Monday retained its GDP forecast for the Indian economy at 6.8% for this fiscal year but cut the projection for the next two years.

ADB said industrial demand is affected by tighter prudential norms from the central bank for unsecured personal loans and continued elevated food prices. It retained the inflation forecast for India at 4.7% for FY25 but revised it downwards to 4.3% for the next fiscal year, due to an expected fall in Brent crude prices.