The Asian Development Bank on Wednesday raised India’s growth outlook for 2025-26 to 7.2%, a 0.7-percentage-point upgrade driven by stronger July-September quarter performance and a clear boost to consumption following recent tax cuts.
The forecast for 2026–27, however, remains unchanged at 6.5%.
This upgrade to India’s outlook is the primary driver behind the Asian Development Outlook (ADO) December 2025, raising the developing Asia and Pacific region’s 2025 growth projection to 5.1%, up from 4.8% in September.
“This is driven by upgrades to India’s outlook based on robust growth in domestic consumption,” the multilateral agency said.
The region is also benefiting from solid export momentum in its high-income technology-exporting economies. China’s forecast for this year has been nudged up to 4.8% from 4.7% on the back of resilient exports and continued fiscal support.
Consumption Boom and Standout Q2 Performance
India’s economy remains the standout performer. GDP grew 8.2% in the July–September quarter—its fastest pace in six quarters—propelled by festival-season demand, stronger factory output, and a robust services sector. This strength more than compensated for weaker agricultural growth.
Supporting this outlook, the Reserve Bank of India recently cut the repo rate by 25 basis points and raised its GDP growth forecast to 7.3%, while lowering inflation expectations to 2%.
Global rating agency Fitch has recently raised India’s GDP growth forecast for FY26 to 7.4%, from 6.9% estimated earlier, citing stronger-than-expected economic momentum and robust domestic demand.
Policy Support and Institutional Alignment
According to the finance ministry, the country’s resilience reflects the cumulative payoff of a decade of investment in physical and digital infrastructure and the economy’s improved capacity to absorb external shocks. A series of measures rolled out since June 2024—including direct and indirect tax relief, sustained public investment, deregulation at the Union and state levels, and enhanced credit and incentive support for MSMEs—has further reinforced domestic demand.
With consumption remaining strong and policy support continuing, India has become the single most important factor lifting the growth outlook for developing Asia in 2025.