The Asian Development Bank (ADB) has decided to retain India’s economic growth forecast at 6.4 per cent for the current fiscal year, according to an update to its Asian Development Outlook released on July 19, 2023. The ADB also projected a growth rate of 6.7 per cent for the following financial year. This decision comes as the ADB believes that robust domestic demand will continue to support the region’s recovery.
Furthermore, the ADB expects inflation to decrease and approach pre-pandemic levels as fuel and food prices decline. An inflation rate of 3.6 per cent for developing economies in Asia this year and 3.4 per cent for 2024 has been forecasted by ADB.
India’s economy experienced a growth rate of 7.2 per cent in the previous fiscal year, which ended in March 2023. Albert Park (ADB Chief Economist ) stated that Asia and the Pacific are steadily recovering from the pandemic. He emphasised that growth is being driven by domestic demand and service activity, and several economies are benefiting from a strong rebound in tourism. However, Mr Park noted that industrial activity and exports remain weak, and the global growth and demand outlook for next year has worsened.
The ADB had also projected in April that India’s economic growth would moderate to 6.4 per cent in the current fiscal year. This downward revision was attributed to tight monetary conditions and elevated oil prices.
The ADB’s decision to maintain India’s growth forecast reflects its confidence in the country’s ability to sustain strong domestic demand and contribute to the region’s economic recovery. However, challenges in industrial activity and exports highlight the need for further measures to stimulate these sectors. Additionally, the worsening global growth outlook serves as a reminder of the interconnectedness of economies and the potential impact of external factors on India’s growth trajectory.
As the fiscal year progresses, policymakers and stakeholders will closely monitor key indicators to gauge the economy’s performance and implement necessary measures to address any emerging challenges. With a focus on promoting industrial growth, boosting exports, and ensuring a favourable global economic environment, India aims to sustain and enhance its economic recovery in the coming years.