Why is it in the news?
- The Asian Development Bank (ADB) has revised India’s GDP growth forecast for the fiscal year 2024-25 to 7% from the previous estimate of 6.7%.
- This adjustment is attributed to strong investment, both from the public and private sectors, and an uptick in consumer demand.
More about the news
- Robust growth is expected to be propelled by strong investment demand and gradual improvement in consumer demand. The momentum in manufacturing and services sectors is highlighted as key contributors to this growth.
- While the projected growth for 2024-25 is optimistic, it is noted to be lower than the 7.6% growth experienced in the 2022-23 fiscal year. The growth during that period was primarily driven by investment demand, as consumer demand remained subdued.
- The ADB anticipates a continued downward trend in inflation, aligning with global patterns.
- Exports are expected to remain relatively subdued in the current fiscal year due to slower growth in major advanced economies. However, improvement is forecasted for the subsequent fiscal year.
- The ADB expects monetary policy to remain supportive of growth as inflation decreases, while fiscal policy aims for consolidation but retains support for capital investment.
- The ADB suggests that India needs to enhance its integration into global value chains to boost exports in the medium term.
- The ADB’s growth forecast for FY25 aligns with the projections made by the Reserve Bank of India (RBI), which also estimated GDP growth at seven per cent for the current fiscal year.
