The Reserve Bank of India (RBI) has projected the country’s real GDP growth for FY25 at 7.2 percent. While consumer price index CPI inflation is seen moderating to 4.5 percent. This forecast came after the Monetary Policy Committee meeting held on Wednesday.
RBI Governor Shaktikanta Das projected, “Real GDP growth for 2024-25 will be 7.2 percent. We expect Q2 to be 7 percent, Q3 at 7.4 percent, and Q4 also at 7.4 percent.” He further noted that the growth projection for Q1 of the next financial year, FY26, is seen at 7.3 percent, with risks considered evenly balanced.
Das explained that robust quarterly performance would underpin economic growth in India’s fiscal year. Real GDP growth stood at 6.7 percent in the first quarter of FY25. Led by higher private consumption and improved investment. Investment as a share of GDP was at a high of 31.8% since 2012-2013. However, government expenditure contracted in the first quarter.
On the supply side, GVA jumped 6.8 percent, higher than the GDP growth. As the industry and services sector also performed well. Das said that high-frequency indicators suggest domestic economic activity is maintaining steady.
On inflation, the central bank has estimated that it would be a shade higher at 4.8 percent in the third quarter of the fiscal. However, it forecasts inflation to ease in the last quarter of this fiscal year due to better kharif harvests. However, the central bank remains guarded as agricultural production is still susceptible to spatial. And temporal rainfall distribution and weather-related shocks could alter the contours of the inflation path.
Liquidity conditions were still surplus in August September and early October, although the liquidity overhang shifted back later in September. Nevertheless, sectors such as agriculture or services remained strong, and government consumption showed signs of bottoming out. Private investment intentions appear to be on the increase, reflecting building confidence in the economy.
The RBI Governor also said that inarguably, inflation remains in a downtrend, but its pace has been slow and uneven. “While headline inflation is declining, it’s happening at a slow pace. We expect moderation in inflation to reverse in September and remain elevated in the near term due to base effects and other factors,” he said.
However, Das added a tinge of optimism-said food inflation could ease in the second half of this fiscal year on strong kharif sowing, good soil moisture, and adequate buffer stocks. “Domestic growth has sustained its momentum with private consumption and investment growing in tandem,” he added.
The monetary policy committee thus persists with its consolidated effort in the inflation battlefield. Adding that growth concerns have to be taken into consideration. Das added, “Resilient growth gives us space to target inflation and bring it down to the 4 percent mark in the long term. We will continue to watch the evolving outlook in the months ahead.”
ANI
