ADB Raises India's Growth Forecast to 7.2% for FY26: Key Highlights from Asian Development Outlook (ADO) December 2025

The Asian Development Bank (ADB), in its latest report Asian Development Outlook (ADO) December 2025: Growth Steadies But Uncertainty Lingers, has revised India’s GDP growth forecast for FY26 sharply upward to 7.2%, an increase of 70 basis points from its earlier estimate of 6.5%.

This upward revision reflects India’s stronger-than-expected Q2 performance in FY26, where the economy grew by 8.2%, powered by robust domestic consumption and the positive effects of recent GST reforms.

India’s Growth Outlook: A Stronger FY26 Ahead

GDP Forecasts

FY26: Upgraded to 7.2% (+70 bps from earlier 6.5%)
FY27: Retained at 6.5%

The ADB noted that India’s growth momentum remains supported by:

Strong private consumption
Higher GST efficiencies
Strengthened agricultural output
Continued policy reforms

The strong Q2 performance played a major role in shaping this optimistic revision.

Inflation Outlook for India

The ADO December 2025 report also revised down India’s inflation projection:

Inflation FY26: 2.6% (down from 3.1%)
Inflation FY27: 4.2% (expected to align closer with RBI’s target range)

Reasons for Lower Inflation Projection

GST rate reductions
Declining food price inflation (second successive month)
Healthy agricultural yields
Favorable weather patterns

These factors collectively created a more stable price environment in the Indian economy.

Growth Forecasts for Developing Asia

ADB has also updated growth projections for developing Asia and the Pacific:

Growth Rate

CY25: Upgraded from 4.8% to 5.1% (+30 bps)
CY26: Increased from 4.5% to 4.6% (+10 bps)

The upward revision reflects stronger-than-expected recoveries in several Asian economies, increased trade resilience, and improved domestic demand dynamics.

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