India's economy is projected to expand at 6.6 per cent in FY27, according to the Asian Development Bank (ADB), which has retained the country's status as one of the world's fastest-growing major economies despite mounting global uncertainties. The ADB's revised projection, published on 9 July, exceeds the International Monetary Fund's (IMF) latest FY27 estimate of 6.4 per cent for India.

Key Drivers of India's Growth

The ADB attributed India's resilience to a combination of policy measures and structural strengths. 'Growth will be supported by policy interventions to attract more foreign capital, as well as fuel tax cuts, targeted credit support, strong services exports, and public capital expenditure,' the multilateral lender stated in its report.

The bank also held its FY28 growth forecast for India steady at 7.3 per cent, unchanged from its April outlook, signalling confidence in the medium-term trajectory. Improving global conditions and export competitiveness gained through trade agreements with various partners are expected to underpin that outlook.

Why the FY27 Estimate Was Trimmed

The ADB's FY27 projection represents a downward revision from earlier estimates, with elevated energy prices cited as the primary drag. The bank noted that higher energy costs erode real household incomes and dampen consumer spending — two pillars of domestic demand. Risks to the outlook remain tilted to the downside, the report cautioned, due to heightened geopolitical tensions and weather-related weakness in agriculture.

Notably, this is the second consecutive quarter in which global institutions have flagged energy-price volatility as a constraint on India's near-term growth, even as the structural story remains intact.

Inflation Outlook

On prices, the ADB revised India's inflation forecast for FY27 upward to 5.2 per cent, while retaining its FY28 inflation estimate at 4 per cent. The FY27 revision reflects the pass-through effect of elevated global energy costs on domestic price levels, which could complicate the Reserve Bank of India's (RBI) monetary policy calculus in the near term.

Regional and Broader Asian Context

India's relative outperformance is clearer when set against the broader regional backdrop. The ADB lowered its South Asia growth forecast for 2026 to 6.0 per cent, down from an earlier projection of 6.3 per cent, citing higher oil prices, rising freight costs, and uncertainty over remittance flows.

Across developing Asia and the Pacific, the lender trimmed its 2026 growth forecast further — to 4.9 per cent from 5.1 per cent — as the prolonged conflict in West Asia disrupted energy supplies and supply chains, raising production costs and slowing economic activity across the region.

India's Standing in the Global Growth Landscape

Despite the near-term challenges, the ADB affirmed that India's growth outlook remains among the strongest globally, underpinned by ongoing reforms, sustained public investment, and resilient services exports. India's edge over peers in the developing Asia basket underscores the relative robustness of its domestic demand and policy framework, even as external headwinds intensify.

With the FY28 forecast holding at 7.3 per cent, the trajectory points to an acceleration — contingent on geopolitical stability and a favourable monsoon season.