Current Affairs - Economy

The Asian Development Bank approved a USD 240 million loan to support the expansion of the Chennai Metro Rail network as part of a larger USD 780 million financing facility. This funding aims to improve urban mobility through the development of new metro lines and stations while promoting inclusivity, safety, and climate resilience. The project focuses on cleaner and more reliable public transport, disaster-resistant infrastructure, and long-term financial sustainability. ADB’s involvement reflects its broader role in supporting India’s urban infrastructure, low-carbon development, and inclusive growth objectives.

India’s Consumer Price Index (CPI) retail inflation increased slightly to 0.71% in November 2025, up from 0.25% in October. The rise was primarily due to easing food deflation, which moderated from -5.02% to -3.91%. While rural inflation turned positive at 0.10% and urban inflation increased to 1.4%, the overall CPI inflation reflects a modest uptick driven by seasonal increases in vegetables, pulses, fruits, eggs, and meat & fish. The moderation of the base effect contributed to this rise, signaling a gradual recovery in price levels after a period of very low inflation.

The Asian Development Bank has revised India’s FY25-26 growth outlook upward to 7.2%, reflecting confidence in the country’s strong economic performance during the July–September period and improved prospects for the full fiscal year. This upgraded estimate highlights India’s role as a major contributor to Asia-Pacific’s growth, which has also been raised to 5.1%. The positive adjustment underscores the momentum driven by robust domestic demand, improved investment climate, and ongoing structural reforms. While the projection for FY26-27 remains stable at 6.5%, the current upward revision indicates sustained economic resilience and a favourable medium-term growth trajectory.

The Monetary Policy Committee reduced the repo rate by 25 basis points, bringing it down to 5.25%. This rate cut comes at a time when inflation has eased significantly to 2.2% and GDP growth in Q2 has reached a robust 8%, creating a favourable economic environment often described as a “goldilocks” phase. With retail inflation remaining below 4% for several months, the RBI aims to support economic activity while ensuring price stability. Additionally, planned liquidity measures such as ₹1 lakh crore OMO purchases and a $5 billion USD/INR swap are expected to maintain adequate liquidity in the financial system.

Fitch Ratings has upgraded India’s GDP growth forecast for FY26 to 7.4%, reflecting strong consumer demand, rising confidence, and the positive impact of GST reforms. This revision follows India’s impressive 8.2% growth in the second quarter of FY26, which marked the fastest expansion in six quarters. The updated forecast indicates a more robust economic outlook driven primarily by private consumption. Fitch also noted a narrowing gap between nominal and real GDP due to stable inflation levels, making the growth more sustainable. While momentum may moderate later due to base effects, the 7.4% projection underscores India’s strong economic fundamentals.