India's fast growth will resume with gross domestic product (GDP) expanding by 7.4% in fiscal year (FY) 2017 and 7.6% in FY2018 supported by reform measures, says a new Asian Development Bank (ADB) report.

In its new Asia Development Outlook (ADO) 2017 report, ADB notes that the deceleration to 7.1% registered last year was due in part to slower investment growth. Also contributing to the moderation was the impact of the government's demonetization of high-value currency notes, though this effect is seen as largely temporary. ADO is ADB's flagship annual economic publication.

"An array of important reforms has propelled India's economic success in recent years," said Yasuyuki Sawada, ADB's Chief Economist. "A continued commitment to reform — especially in the banking sector — will help India maintain its status as the world's fastest growing major economy."

India's growth in FY2016 was fuelled by agriculture and government services. Industrial growth, however, slowed to 5.8% over the last 12 months from 8.2% in FY2015. Growth in services moderated to 7.9% due to slowdowns in finance and real estate. Net foreign direct investment (FDI) in the country remained strong at $36.7 billion in FY2016 following the government's efforts to simplify guidelines and allow FDI in key economic sectors.

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