ADB Cuts India’s FY26 GDP Growth Forecast to 6.5% Amid Trade Uncertainty

Current Context: On 23 July 2025, the Asian Development Bank (ADB) released its Asian Development Outlook (ADO) July 2025, revising India’s GDP growth forecast for FY26 to 6.5%, down from 6.7% projected in April.

Highlights

• Reason for downgrade: Impact of US baseline tariffs, global trade uncertainty, and policy ambiguity affecting exports and investment flows.
• Sectoral resilience: Growth still supported by agriculture and services, aided by above-normal monsoon forecasts and rural demand revival.
• Fiscal strength: Boosted by RBI’s record ₹2.69 trillion dividend and recent repo rate and CRR cuts.
• FY27 forecast: Expected rebound to 6.7%, assuming improved policy clarity and favorable financial conditions.

Question:

Q.1 What is India’s revised GDP growth forecast for FY26, as per ADB’s Asian Development Outlook (ADO) July 2025?
a) 6.3%
b) 6.5%
c) 6.7%
d) 6.9%

Answer: b) ADB cut its FY26 forecast from 6.7% (April) to 6.5% due to global trade issues and policy uncertainty.