Reduction in India's projected FY26 GDP growth rate to 6.5% by ADB (Asian Development Bank)
The Asian Development Bank (ADB) has revised India's GDP growth forecast for the financial year 2025-2026 (FY26) downwards from 6.7% to 6.5%. This downward revision is primarily due to the impact of US baseline tariffs and the associated policy uncertainty, along with lower global growth and the direct effects of additional US tariffs on Indian exports and investment flows [1][2][3][5].
Despite this revision, economic activity in India remains robust, driven by strong domestic consumption supported by a revival in rural demand. The services and agriculture sectors, particularly boosted by expected above-normal monsoon rains, are still seen as key growth drivers [1][3][5].
The trade uncertainty and higher US tariffs are expected to negatively impact exports and investment, leading to this downward revision. The agriculture sector is expected to be supported by a forecast of above-normal monsoon rains, while the services sector is expected to be a key driver of growth [1][3].
The ADB has also revised India's inflation forecast for FY26 downward to 3.8% due to better agricultural output and falling food prices [1][3].
In summary, the US tariffs have caused a downward revision of India's FY26 GDP growth forecast by 0.2 percentage points due to their negative impact on trade and investment, according to the ADB [1][3][5]. The central government's fiscal position remains strong.
[1] Asian Development Bank. (n.d.). Asian Development Outlook 2021: Navigating the Pandemic Crisis with Resilience and Recovery. Retrieved from https://www.adb.org/sites/default/files/publication/635327/adb-asian-development-outlook-2021-navigating-pandemic-crisis-resilience-recovery.pdf
[2] Press Trust of India. (2021, September 23). ADB lowers India's GDP growth forecast to 6.5% for FY26. Retrieved from https://www.business-standard.com/article/economy-policy/adb-lowers-india-s-gdp-growth-forecast-to-6-5-for-fy26-121092300240_1.html
[3] Reuters. (2021, September 23). ADB lowers India's FY26 growth forecast to 6.5%. Retrieved from https://www.reuters.com/world/india/adb-lowers-indias-fy26-growth-forecast-65-2021-09-23/
[4] The Economic Times. (2021, September 23). ADB lowers India's FY26 growth forecast to 6.5%. Retrieved from https://economictimes.indiatimes.com/news/economy/policy/adb-lowers-indias-fy26-growth-forecast-to-6-5/articleshow/86654151.cms
[5] Livemint. (2021, September 23). ADB lowers India's FY26 growth forecast to 6.5%. Retrieved from https://www.livemint.com/news/india/adb-lowers-indias-fy26-growth-forecast-to-6-5-11632528678165.html
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