Bhubaneswar: A day after International Monetary Fund (IMF) revised its growth projections for India to 7%, the Asian Development Bank (ADB) on Wednesday also maintained the country’s GDP growth forecast at 7% for the current financial year.
It has attributed the upward projection to a possible rebound in agriculture, given above-normal monsoon projections.
The IMF had projected the GDP growth to be 6.8% in April. Last month, as per the revised forecast of the Reserve Bank of India (RBI) the GDP growth was estimated to be 7.2% from the previously estimated 7% growth projection.
“The Indian economy is on track to grow by 7 per cent in FY2024 (ending 31 March 2025) and 7.2 per cent in FY2025 (next financial year), as projected in ADO April 2024,” stated the July edition of the Asian Development Outlook (ADO).
The report also called India the region’s fastest-growing economy. The ADB has also increased the economic growth forecast for Asia and Pacific to 5% from the previous projection of 4.9%
Growth factors
It highlighted that robust growth is expected in India’s industrial sector, driven by manufacturing and strong construction demand led by housing. Led by public investment and bank credit, the investment demand has also been predicted to stay strong. The private investment demand is also improving, according to the report.
“After muted growth in FY2023 (previous fiscal), a rebound in agriculture is expected given the above-normal monsoon projections. This is notwithstanding the slower advance of monsoon in June. A rebound in agriculture will be important to sustain growth momentum in rural areas,” the report cited.
However, the ADB claimed that the export growth will continue to be led by services. Merchandise exports is showing relatively weaker growth.
Inflation forecast
The ADO has estimated the rate of inflation for India in the current fiscal to be 4.6 per cent. It projects a marginal decline to 4.5% in the next fiscal. Meanwhile, the inflation forecast for the region has decreased to 2.9 per cent due to downward revisions in China and the Caucasus and Central Asia. There is a slight increase in South Asia, according to the report.
ADB approves USD 240.5 million loan for rooftop solar systems in India
In a major boost to renewable energy initiatives in India, the ADB has approved a loan of USD 240.5 million to finance rooftop solar systems in the country. It will aid the government’s efforts to expand energy access through renewable energy in India.
ADB’s financing supports will contribute to the Prime Minister’s Surya Ghar programme, which encourages people to install rooftop solar systems across the country, according to media reports.
According to an Economic Times report, the approved financing would be allocated to the State Bank of India (SBI) and the National Bank for Agriculture and Rural Development (NABARD). These institutions will provide loans to developers and end-users across the country for the installation of rooftop solar systems.
The report claimed that the ADB will provide SBI with USD 90.5 million from its Clean Technology Fund (CTF), while NABARD will receive USD 150 million—comprising USD 80 million from its ordinary capital resources and USD 70 million from CTF.
