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| The Asian Development Bank has raised India’s FY2026-27 economic growth forecast to 7%, citing stronger domestic demand, investment, manufacturing and services activity. |
What The ADB Changed
The ADB announced the updated projections in its September 2026 Asian Development Outlook. Its new estimate puts India’s FY2026-27 growth at 7%, compared with 6.6% in its previous forecast.
The bank expects growth to remain relatively strong in FY2027-28, but its forecast for that year has been reduced from 7.3% to 7.1%. The change does not necessarily indicate a sharp deterioration in economic activity. ADB attributed part of the adjustment to the stronger base created by higher growth expected during FY2026-27.
Why India’s Growth Forecast Was Upgraded
A major reason behind the revision is the stronger performance recorded at the start of FY2026-27. India’s economy expanded 7.8% year-on-year in the first quarter, supported by investment demand, consumption, manufacturing and services.
ADB expects domestic demand to remain an important engine of growth. The bank also pointed to robust tax collections, relatively low interest rates, rising household incomes and an anticipated revision of government salaries and pensions in FY2027-28 as factors that could support spending. 2
Government Investment Remains Important
Public investment is another significant part of the outlook. According to ADB, central government capital expenditure increased 29.9% during the first quarter of FY2026-27 and remains on track toward its annual target of 11.5%.
Capital expenditure refers to government spending on long-term assets and infrastructure, such as roads, transport networks and other projects that can support economic activity beyond the immediate spending period.
ADB also expects private investment to strengthen. It identified improvements in logistics infrastructure, regulatory reforms and a strong pipeline of projects as factors that could encourage companies to increase investment. 3
Services, Manufacturing And AI Investment
India’s services sector remains an important part of the growth outlook. ADB expects continued strength in services, including investment connected with artificial intelligence.
The bank also highlighted manufacturing and improvements in agricultural productivity. Together, these areas matter because a broad-based expansion can provide support across different parts of the economy rather than relying on a single sector.
ADB expects services and construction to remain relatively strong during both FY2026-27 and FY2027-28. 4
Inflation Outlook Has Also Improved
The ADB has lowered its inflation forecast for FY2026-27 to 5%, from 5.2% previously. For FY2027-28, it has kept its inflation projection at 4%.
Inflation measures how quickly the prices of goods and services are rising. For households, businesses and policymakers, the inflation outlook matters because persistent price increases can reduce purchasing power and influence interest-rate decisions.
ADB said inflation could remain within the Reserve Bank of India’s target range, while also noting that the central bank could consider raising the repo rate if price pressures become stronger.
Risks That Could Affect The Outlook
The upgraded forecast does not mean that India’s economic path is free of risks. ADB identified prolonged geopolitical uncertainty and weather disruptions associated with El Niño among the factors that could affect future growth.
Weather disruptions can be particularly important for agriculture. If agricultural production is affected, food prices and rural incomes can also come under pressure. Higher commodity prices or disruptions to global supply chains can increase costs for industries that depend on imported inputs.
These risks are important because economic forecasts are projections rather than guarantees. They depend on assumptions about domestic demand, investment, inflation, global trade, commodity prices and other conditions that can change.
Other Major Forecasts Have Also Increased
The ADB revision comes alongside upward revisions from other major institutions. According to the report, Fitch Ratings has raised its FY2026-27 India growth forecast to 6.9% from 6.4%, while S&P Global has increased its forecast to 7% from 6.6%.
Both institutions, however, expect growth to moderate during the second half of the fiscal year. These different forecasts illustrate why economic projections should be viewed as estimates based on particular assumptions rather than as fixed outcomes. 5
What The Forecast Means For The Indian Economy
The immediate significance of the ADB revision is that the institution now expects India to expand faster during FY2026-27 than it previously estimated. The upgrade reflects stronger recent economic data and continued expectations for domestic demand and investment.
For businesses, stronger projected growth can indicate a relatively supportive environment for investment and demand, although individual sectors can perform very differently. For households, the broader economic picture will depend not only on GDP growth but also on employment, wages, inflation and the cost of everyday goods and services.
For policymakers, the challenge is to maintain growth while keeping inflation and external risks under control. ADB's assessment therefore combines a stronger growth projection with warnings about geopolitical uncertainty, commodity prices and weather-related disruptions.
Key Numbers At A Glance
| Indicator | ADB Forecast |
|---|---|
| India FY2026-27 GDP growth | 7% |
| Previous FY2026-27 forecast | 6.6% |
| India FY2027-28 GDP growth | 7.1% |
| Previous FY2027-28 forecast | 7.3% |
| Q1 FY2026-27 GDP growth | 7.8% year-on-year |
| FY2026-27 inflation forecast | 5% |
| FY2027-28 inflation forecast | 4% |
These figures come from the ADB's September 2026 outlook as reported on September 24, 2026.
Frequently Asked Questions
What is the ADB?
The Asian Development Bank is a multilateral development institution that publishes economic assessments and provides financing and technical support for development across Asia and the Pacific.
What is India’s latest ADB growth forecast for FY2026-27?
ADB forecasts 7% economic growth for India in FY2026-27, up from its previous estimate of 6.6%.
Why did ADB raise its India growth forecast?
The revision reflects stronger-than-expected recent growth, resilient domestic demand, investment, manufacturing and services.
What was India’s GDP growth in the first quarter of FY2026-27?
India’s economy grew 7.8% year-on-year in the first quarter of FY2026-27, according to the ADB report cited in the latest update.
Did ADB lower any of its forecasts?
Yes. Its FY2027-28 growth forecast was reduced from 7.3% to 7.1%, partly because the stronger expected growth in FY2026-27 creates a higher comparison base.
What inflation rate does ADB expect for India?
ADB lowered its FY2026-27 inflation forecast to 5% and retained its FY2027-28 forecast at 4%.
What risks does ADB see for India’s growth?
The bank highlighted geopolitical uncertainty and weather disruptions linked to El Niño, which could affect agricultural output and industrial input costs.
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