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.

Inflation Trends in Developing Asia

Inflation estimates for the region reflect moderation:

• CY25: Revised down from 1.7% to 1.6%

  Mainly due to lower food inflation in India

• CY26: Retained at 2.1%

These projections indicate that price pressures across developing Asia are easing, despite global uncertainties.