Government of India’s Infrastructure Development to Drive Manufacturing Growth: ADB Director

ADB raises India’s growth forecast to 7% for FY25; FY26 growth at 7.2%
According to ADB India director Mio Oka, the Indian government's focus on infrastructure development and fiscal consolidation will boost manufacturing competitiveness, driving growth and exports. ADB forecasts India's economy to grow 7.6% in FY24, with strong growth in the manufacturing sector. Private investment and urban housing initiatives will further support growth.
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The Government of India’s focus on infrastructure development and fiscal consolidation is expected to boost manufacturing competitiveness, increase exports, and drive future growth, according to ADB India director Mio Oka. The Indian economy is forecasted to grow at 7.6% in FY24, with manufacturing playing a key role in driving growth, recording double-digit growth in the second and third quarters.

ADB’s upward revision in growth forecast follows similar revisions by other multilateral institutions and research agencies, with the World Bank recently raising India’s growth forecast to 6.6%. The strong public capex push and a potential increase in private investment are expected to support growth, along with government initiatives such as support for urban housing and stable interest rates.

Inflation is expected to be higher at 4.6% in FY25, but is projected to moderate to 4.5% in the following fiscal year. ADB anticipates that this will lead to less restrictive monetary policy, potentially paving the way for a rate cut in the second half of 2024. The government’s commitment to fiscal consolidation, aiming to reduce the fiscal deficit to 4.5% of the GDP by FY26, is expected to create space for private borrowing and support economic growth.

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