NEW DELHI: The Asian Development Bank (BAD) revised India's growth forecast for the current financial year to 6.7%, citing a stronger than expected performance in the second quarter. This adjustment marks an increase from the previous projection of 6.3%, as revealed in the December 2023 Asian Development Outlook report released on Wednesday.
The second quarter of fiscal year 2023-24 witnessed a remarkable GDP growthof 7.6%, boosting accumulated growth in the first half of the year (April-September) to an impressive 7.7%. The report highlights that the industrial sector, which encompasses manufacturing, mining, construction and utilities, has experienced double-digit growth, contributing significantly to global economic expansion.
The forecast for the entire fiscal year indicates slightly slower growth in the agricultural sector, offset by the robust performance of the industry, justifying the upward revision. The report predicts that higher growth in fixed investment, driven by increased capital expenditure by central and state governments, will offset lower growth in private consumption expenditure and weaker-than-expected exports.
The Reserve Bank of India (RBI) also revised its growth estimate last week, raising it to 7% from the previous projection of 6.5% for the 2024 financial year. This alignment in the growth projections of two influential financial institutions highlights a positive outlook for the India's economic trajectory.
Looking ahead to the next financial year, FY25, the ADB maintains its growth forecast for India at 6.7%. The report indicates that India's growth momentum accelerated to 7.1% in the first three quarters of the calendar year, driven mainly by robust industrial production and increased investment.
However, the report warns that post-pandemic reopening momentum in most Southeast Asian economies is slowing. Furthermore, merchandise exports from high-yield technology exporters, while stabilizing, remain subdued.
In terms of inflation, the ADB maintained its forecast of 5.5% for the current financial year, in line with the Central Bank of India's inflation projection of 5.4% for FY24. The report suggests that India's inflation forecasts for 2023 and 2024 are in line with recent data and within expectations.



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