ADB retains India’s GDP forecast for FY23 at 7.5%

[GS Paper 3 – GDP, Indian Economy]

The Asian Development Bank (ADB) recently projected the Indian economy to grow at 7.5 per cent in FY23 on the back of strong investment growth.

The projection factors in the impact of the Russian invasion of Ukraine, which will be largely felt indirectly through higher oil prices. It also assumes that the severity of the Covid-19 pandemic will subside and vaccination rates will further rise in the country.

Key Projections

• ADB retained its earlier growth forecast for India while other agencies have been paring down their growth projections, possibly because its estimate for India is already conservative.
• According to ADB, India’s fiscal policy is expected to be supportive of growth. The higher capital expenditure is likely to improve the efficiency of India’s logistics infrastructure, private investments, generate jobs in construction and sustain growth.
• Economic activity in FY23 is touted to be driven by investment and public investment playing the role of a catalyst.
• ADB also acknowledged risks associated with its outlook. The main risks include the uncertain global economic conditions, renewed Covid-19 outbreaks and new variants, monetary policy tightening in the US, and unexpected and sharp rises in commodity prices. 
• ADB believes oil price increases will exert upward pressure on prices, but the impact on inflation will be moderated by fuel subsidies and oil refineries stocking up on cheap crude from the Russian Federation.

About ADB

• Asian Development Bank (ADB) is a regional development bank established on 19 December 1966.
  

• The Headquarters of ADB is in the Ortigas Center located in the city of Mandaluyong, Metro Manila, Philippines.
  

• India is a founding member of the Asian Development Bank (ADB).
  

• It aims to promote social and economic development in Asia and the Pacific.

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