India's growth projected at 7%; govt spending, agriculture to boost economy: ADB report

India's growth forecast for the current fiscal has been projected at 7 per cent by the Asian Development Bank (ADB) on Wednesday which said better farm output and higher government spending will boost economic activity. In its Asian Development Outlook (ADO) update of September, the ADB said exports in the current fiscal will be higher than earlier projected, led by larger services exports. However, merchandise export growth will be relatively muted through the next fiscal.

What ADB said on GDP growth

"GDP growth is expected at 7 per cent in fiscal year 2024 (FY2024, ending 31 March 2025) and 7.2 per cent in FY2025, both as forecast in ADO April 2024," the ADB said, adding that India's growth prospects remain robust.

The Indian economy grew 8.2 per cent in the last fiscal (2023-24). The RBI projects growth to be 7.2 per cent in the current fiscal.

GDP growth slowed to 6.7 per cent in first quarter

It said while GDP growth slowed to 6.7 per cent in the first quarter (April-June) of FY2024, it is expected to accelerate in the coming quarters with the improvement in agriculture and a largely robust outlook for industry and services.

"India's economy has shown remarkable resilience in the face of global geopolitical challenges and is poised for steady growth," ADB Country Director for India Mio Oka said.

"Agricultural improvements will enhance rural spending, which will complement the effects of robust performance of the industry and services sectors," he added.

The report highlights that an above-average monsoon in most parts of the country will lead to strong agricultural growth, enhancing the rural economy in FY2024.

Private consumption is expected to improve, driven by rural consumption fuelled by stronger agriculture and by already robust urban consumption.

The outlook for private investment is upbeat, but growth in public capital expenditure, heretofore high, will moderate in FY2025.

(With inputs from PTI)