new delhi: The Asian Development Bank (ADB) on Wednesday lowered India’s growth forecast for FY26 to 6.5 per cent from 6.7 per cent on account of trade uncertainty and higher US tariffs that are expected to impact exports and investment.
Despite the downward revision from the April 2025 Asian Development Outlook (ADO), India remains one of the fastest-growing major economies in the world.
“This revision is primarily due to the impact of US baseline tariffs and associated policy uncertainty. In addition to the effects of lower global growth and the direct impact of additional US tariffs on Indian exports, heightened policy uncertainty may affect investment flows,” the July ADO said.
Despite this, economic activity remains robust, with domestic consumption set to grow strongly on the back of revival of rural demand, it said.
Services and agriculture sectors are expected to be key drivers of growth, the latter supported by a forecast of above-normal monsoon rains, it added.
The Economic Survey has projected the GDP growth for FY26 between 6.3 per cent and 6.8 per cent, while RBI lowered its growth forecast from an earlier level of 6.7 per cent to 6.5 per cent.
India’s economy grew by 6.5 per cent in the FY25, marking its slowest pace in four years. This growth was the slowest in four years and compared to a 9.2 per cent expansion in the previous 2023-24 fiscal.
The Central government’s fiscal position remains strong, with higher-than-expected dividends from the Reserve Bank of India, and it is on track to meet the targeted reduction in its fiscal deficit.