Industry Odisha Bureau, Sep 23: ADB has raised India’s 2026 GDP growth forecast to 7%, citing strong domestic demand, even as a strengthening El Nino threatens food supply and inflation.
ADB Raises India Growth Forecast
The Asian Development Bank has lifted India’s 2026 growth forecast to 7%. The upgrade reflects broad-based domestic strength. Consumption, investment and government spending are driving momentum. ADB linked the revision to resilient economic activity across sectors.
Domestic Demand Keeps Growth Supported
Private consumption has remained notably firm. Gross fixed capital formation continues to hold up well. Public infrastructure spending is accelerating steadily. Services activity is adding further support. Private capital expenditure is also showing signs of revival. Together, these factors are helping India outpace regional peers.
El Nino Emerges as Key Economic Risk
A strengthening El Nino now threatens that momentum. Elevated energy prices compound the potential impact. ADB warned this combination could hit agricultural yields. It could also constrain hydropower generation output. Together, these pressures may lift prices across South Asia. ADB described this as a dual supply-side shock.
Weak Monsoon Raises Food Supply Concerns
India’s monsoon is running 15% below its long-term average. That shortfall has raised concerns over Kharif crops. Rice, sugarcane and corn face particular scrutiny. A weaker harvest could intensify food-price pressures. Rural incomes may also come under strain. Household budgets could feel the squeeze as well.
Inflation Complicates RBI Outlook
Retail inflation reached 4.8% in August. That marked a third straight month above target. The RBI’s inflation target stands at 4%. Higher food prices drove much of the increase. ADB expects inflation to average 5.2% through 2026. That leaves policymakers with limited room to manoeuvre.
S&P and Moody’s Also Lift India Forecasts
The ADB upgrade fits a wider pattern. S&P Global Ratings raised its FY27 forecast to 7%, up from 6.6%. It also expects a 25-basis-point RBI rate rise this fiscal year. Moody’s Ratings raised its own forecast to 7%, from 6% previously. Both agencies cited strong consumption and investment trends. The World Economic Forum also flagged India’s growth outlook favourably. Jefferies expects GDP growth between 6.5% and 7%. It sees corporate earnings growth accelerating to 17% next fiscal year, up from 14%.
Growth Strength Faces Weather Test
India’s growth story remains firmly domestic-led for now. Consumption, investment and infrastructure spending continue driving expansion. Yet weather has become an unavoidable variable. A poor monsoon could test that resilience directly. Food and energy prices may determine the next chapter. Whether growth momentum survives that test remains uncertain.
