The Asian Development Bank (ADB) on Wednesday forecasts India’s economic growth at 7 per cent for the financial year FY2024 and 7.2 per cent for FY2025. ADB reiterated that India’s economic growth will remain robust.

“India’s economy has shown remarkable resilience in the face of global geopolitical challenges and is poised for steady growth,” said ADB Country Director for India Mio Oka. “Agricultural improvements will enhance rural spending, which will complement the effects of robust performance of the industry and services sectors,” says ADB.

ADB, in its September edition of Asian Development Outlook (ADO), highlighted that an above-average monsoon in most parts of the country will lead to strong agricultural growth, enhancing the rural economy in FY2024.

It maintains a positive outlook for the industry and services sectors, private investment, and urban consumption for FY2024 and FY2025. The new government policy offering employment-linked incentives to workers and firms could increase labour demand and support job creation starting in FY2025.

The report is optimistic about new employment-linked incentives to the workers and firms, the policy does have the potential to increase labour demand and support job creation beginning FY2025.

The report says “With the government’s fiscal consolidation efforts, central government debt is projected to decrease from 58.2% of GDP in FY2023 to 56.8% in FY2024. The general government deficit, which includes state governments, is expected to fall below 8% of GDP in FY2024.

“Consumer inflation is anticipated to rise to 4.7 per cent in FY2024 due to elevated food prices, despite higher agriculture output expectations.The ADB, in its comment, highlighted that the elevated inflation has prevented the Reserve Bank of India (RBI) from lowering the policy interest rates.

“If improved agricultural supply leads to moderating food price increases, the central bank may begin lowering policy rates in FY2024, enhancing prospects for credit expansion. India’s current account deficit is forecast to be 1.0 per cent of GDP in FY2024 and 1.2 per cent in FY2025, down from the previous forecast of 1.7 per cent for both years, due to better exports, lower imports, and strong remittance inflows,” the ADB added.

The outlook is based on the central government achieving its capital expenditure target in FY2024.”These risks may be offset by higher foreign direct investment, which could support growth and investment, particularly in manufacturing. Additionally, improvements in the supply of agricultural products may reduce food prices, potentially lowering consumer inflation below the forecast,” ADB says.

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