New Delhi: The Asian Development Bank (ADB) on Friday projected India’s GDP growth to remain “robust” at 6.9 per cent in the current fiscal, and rise to 7.3 per cent in next fiscal driven by strong domestic demand, and supported by easing financing conditions and lower US tariffs on Indian goods.
In its Asian Development Outlook April 2026 report, the ADB said a prolonged conflict in the Middle East could undermine India’s macroeconomic performance through multiple channels, including higher energy prices, trade flow disruptions, and weaker remittance inflows.
It projected inflation to more than double from 2.1 per cent in 2025-26 to 4.5 per cent in the current fiscal due to a rebound in food prices from earlier declines, higher global oil prices, currency weakness, and rising precious metal prices. It projected inflation to ease to 4 per cent in the 2027-28 fiscal on account of lower oil prices and moderating food prices.
“A prolonged conflict in the Middle East is the single biggest risk to the (developing Asia and Pacific) region’s outlook, as it could lead to persistently high energy and food prices and tighter financial conditions,” said ADB Chief Economist Albert Park. “With renewed trade policy uncertainty posing additional risks, it is essential that governments implement sound macroeconomic policies to sustain growth and contain inflation, with targeted support measures to protect vulnerable households.”
ADB expects economic growth in developing Asia and the Pacific to slow to 5.1 per cent in both 2026 and 2027, from 5.4 per cent last year, weighed down by the conflict in the Middle East and continuing trade uncertainty.
The recent surge in energy prices and potential disruptions to fertiliser markets linked to the conflict in the Middle East could lead to inflationary pressure on global food prices, it said.
With regard to India, ADB said GDP growth is projected to decline to 6.9 per cent in current fiscal (April-March), from 7.6 per cent in 2025-26 primarily due to external challenges, and expand to 7.3 per cent in FY2027 as consumption and investment benefit from favourable policies and the external environment improves.
A key policy challenge of India is to rationalise subsidies and transfers to protect vulnerable groups while preserving fiscal space for growth-enhancing public investment, it said.
“Despite a worsening global economic and geopolitical environment, growth in India is forecast to remain robust at 6.9 per cent in fiscal year 2026 (2026-27).
Activity will be underpinned by strong domestic demand, supported by easing financing conditions, and lower US tariffs on Indian goods,” it said.
ADB’s growth projections compare with 6.9 per cent estimated by the RBI, 6.6 per cent by the World Bank, 6.1 per cent by the OECD and 6 per cent by Moody’s Ratings.
Growth is projected to rise to 7.3 per cent in FY 2027-28, driven by domestic reforms, the effects of trade agreements with the European Union, and expected government salary increases, ADB added.
In the Asia Development Outlook report released in December, 2025, ADB had projected India’s GDP growth at 6.5 per cent for 2026-27 fiscal.