(ADB) has raised India’s growth forecast to 6.7% for the current financial year from its earlier projection of 6.3% on account of higher-than-expected second quarter numbers.
The second quarter of FY24 saw higher-than-expected GDP growth of 7.6%, causing growth in the first half (April-September) to expand by a strong 7.7%, according to the Asian Development Outlook December 2023 released on Wednesday.
Economic data also indicate that the industrial sector in particular, including manufacturing, mining, construction, and utilities, grew by double digits, it said.
“For FY24 as a whole, agriculture is expected to grow slightly slower than expected, but this will be more than offset by industry’s much stronger-than-expected growth, hence the upward revision,” it said.
On the demand side, ADB said, higher growth in fixed investment, driven by increased capital spending by the central government and state governments, will compensate for lower growth in private consumption expenditure and weaker-than-expected exports.
Last week, the Reserve Bank of India (RBI) too increased its growth estimate for FY24 to 7% from its earlier projection of 6.5%.
The September Asian Development Outlook had projected a GDP growth of 6.3% for FY24.
For the next financial year, FY25, the Manila-based multilateral funding agency has kept its growth forecast unchanged at 6.7%. Its report said India’s growth also accelerated to 7.1% in the first three quarters of the calendar year, driven by strong industrial production and investment.
The boost from post-pandemic reopening in most Southeast Asian economies is waning, and merchandise goods exports from high-income technology exporters remain subdued, although they have stabilised, it said.
With regard to inflation, the report retained it at 5.5% for the current financial year. The RBI has also retained its inflation forecast at 5.4% for FY24.
India’s inflation forecasts for 2023 and 2024 are in line with recent data and are still within expectations, the ADB report said.
