ADB Revised India’s GDP Growth forecast for FY26 to 6.7% amid USA Tariff Risks

Current Context: The Asian Development Outlook 2025 report, released by the Asian Development Bank (ADB) on April 9, 2025, provides insights into India's economic growth and challenges.

Highlights:

GDP Growth Forecast: India's GDP growth for FY26 has been revised to 6.7%, down from the earlier estimate of 7%. Growth for FY27 is projected at 6.8%.
Reasons for Revision: The revision reflects risks from US tariff levies on Indian exports, which could impact trade and investment flows.
Resilience Factors: Despite challenges, India's growth remains supported by:

Rising rural incomes.
Moderating inflation.
Favorable fiscal and monetary policies.

Sectoral Contributions:

Services Sector: Expected to remain a key growth driver, supported by business services exports and demand for education and healthcare.
Agriculture: Anticipated to maintain strong growth, especially with robust winter crop sowing.
Manufacturing: Projected to recover from slower growth in FY25.
Inflation Outlook: Inflation is expected to ease to 4.3% in FY26 and further to 4% in FY27, providing room for potential interest rate cuts.
Global Risks: The report highlights uncertainties from global trade policies, rising commodity prices, and geopolitical tensions.

Question:

Q.1 What is the revised GDP growth forecast for India for FY26 according to the Asian Development Outlook 2025 report?
a) 7.2%
b) 6.7%
c) 6.5%
d) 7.0%

Answer: b) The ADB revised India’s GDP growth forecast for FY26 to 6.7%, down from its earlier projection of 7%, primarily due to external risks like US tariff levies.