ADB keeps India's GDP growth unchanged at 7% for current financial year

Asian Development Bank (ADB) has kept its outlook for India's economic growth unchanged at 7 per cent for the current fiscal year while forecasting a weaker-than-previously expected pace for developing Asia.

ADB's 7 per cent growth projection for fiscal 2022-23 (April 2022 to March 2023), unchanged from its September forecast, compares to 8.7 per cent GDP growth in 2021-22.

For 2023-24, the GDP growth has been kept unchanged at 7.2 per cent.

The Manila-based ADB in a report on Wednesday saw Asia expanding 4.2 per cent this year before accelerating to 4.6 per cent in 2023. These projections compare to the previously estimated expansion of 4.3 per cent and 4.9 per cent, respectively.

"Despite recent global headwinds, the Indian economy is expected to grow by 7.0 per cent, as projected in the Update, supported by a strong domestic base.

"While some recent high-frequency indicators are more favourable than expected -- notably consumer confidence, electricity supply and purchasing managers' indexes -- others are a little less favourable, in particular exports, largely textiles and iron ore, and the index of industrial production of consumer goods," it said.

The growth forecast for 2023-34 is unchanged at 7.2 per cent, "sustained by positive effects from structural reform and from public investment catalysing private investment".

Inflation in India is still expected to rise to 6.7 per cent in 2022-23 before falling back to 5.8 per cent.

"In India, the economy grew by 6.3 per cent in Q2 (July-September) of the fiscal year 2022-23, reflecting contraction in public consumption of 4.4 per cent even as exports grew by 11.5 per cent despite the global slowdown," ADB said.

On the supply side, the increase was led by service sector growth at 9.3 per cent, contributing 4.6 percentage points to GDP growth.

Industry, by contrast, suffered a small contraction by 0.8 per cent, dragged down by contraction in manufacturing and mining, ADB added.