New Delhi, Apr 11 (KNN) The Asian Development Bank (ADB) has raised India's economic growth projection for the fiscal year 2024-25 to 7 per cent from its earlier estimate of 6.7 per cent.

The upward revision comes on the back of robust public and private investments alongside a strong services sector performance.

In its flagship 'Asian Development Outlook' report released on Thursday, the multilateral lender cited higher capital expenditure by the central and state governments on infrastructure development as a key growth driver for FY25.

Additionally, an anticipated rise in private corporate investment, buoyant services sector, and improved consumer confidence are expected to propel the growth momentum.

However, the bank warned that unanticipated global events such as supply chain disruptions affecting crude oil markets and weather-related shocks to agriculture pose risks to India's economic outlook.

Mio Oka, ADB's Country Director for India, lauded the government's efforts to boost infrastructure development while pursuing fiscal consolidation and creating an enabling business environment, noting that these measures will enhance manufacturing competitiveness and drive future growth.

The report highlighted a 17 per cent increase in the central government's capital expenditure for FY25 compared to the previous fiscal year, coupled with transfers to state governments, which will bolster infrastructure investment.

A new government initiative to support urban housing for middle-income households is also expected to spur housing growth.

With inflation projected to moderate to 4.6 per cent in FY25 and further ease to 4.5 per cent in FY26, the ADB anticipates monetary policy to become less restrictive, facilitating rapid offtake of bank credit and supporting private investment.

The services sector, manufacturing, and agriculture are expected to contribute to the growth momentum, aided by factors such as rising demand for financial, real estate, and professional services, easing input cost pressures, and expectations of a normal monsoon.

While foreign direct investment may be affected in the near term due to tight global financial conditions, the ADB expects it to pick up in FY26 with higher industry and infrastructure investment.

Goods exports, which may face headwinds from lower growth in advanced economies, are also projected to rebound in FY26 as the global economic situation improves.

(KNN Bureau)