At Monetary Policy meeting, RBI retains 7 % real growth rate projection for FY25

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Mumbai: The Reserve Bank of India Montary Policy Committee meeting has estimated real growth rate for financial year 2024-25 at 7 per cent. RBI Governor Shaktikanata Das, while announcing the outcome of the MPC on Friday, said that growth in first quarter of FY25 is projected at 7.1 per cent, followed by 6.9 per cent in second quarter and 7 per cent each in both third and fourth quarters.

“Since the last policy, the growth inflation dynamics has played out favourably. Growth has continued its momentum surpassing all expectations. Headline inflation has eased to 5.1 per cent during both January and February,” Das said.

He said that global economy has remained resilient with a stable outlook reflected in various high quality indicators.
“Credible consolidation plans particularly in major advanced economies focussing on growth advancing investments would be necessary to address this challenge…India presents a different picture on account of its fiscal consolidation and faster GDP growth,” Das said.

The RBI Governor also said that the advance estimates for 2023-24 placed the real GDP growth at 7.6 per cent, which is the third successive year of 7 per cent or higher growth. “Turning to domestic growth, domestic economic activity continues to expand at an accelerated pace, supported by fixed investment and an improving global environment,” Das said.

“The second advance estimates placed the real GDP growth at 7.6 per cent for 2023-24, the third successive year of 7 per cent or higher growth,” he added. He further said that the outlook for agriculture and rural activity appears bright, with good rabi wheat crop and improved prospects of kharif crops, due to expected normal south-west monsoon.

“Strengthening of rural demand, improving employment conditions and informal sector activity, moderating inflationary pressures and sustained momentum in manufacturing and services sector should boost private consumption,” he said.

“The prospects of investment activity remain bright owing to upturn in the private capex cycle becoming steadily broad-based; persisting and robust government capital expenditure; healthy balance sheets of banks and corporates; rising capacity utilisation; and strengthening business optimism as reflected in our surveys,” the RBI Governor said.
He noted that improving global growth and trade prospects, along with India’s rising integration in global supply chains, is expected to propel external demand for goods and services. He, however, added that the headwinds from protracted geopolitical tensions and increasing disruptions in trade routes pose risks in the overall outlook.

“Taking all these factors into consideration, real GDP growth for 2024-25 is projected at 7.0 per cent with Q1 at 7.1 per cent; Q2 at 6.9 per cent; Q3 at 7.0 per cent; and Q4 also at 7.0 per cent. The risks are evenly balanced,” Das further said.

Notably, RBI in its February policy, had also projected India’s GDP at 7 per cent in FY25. India’s GDP growth rate in the quarter ended December 2023 stood at 8.4 per cent, which was well above the RBI’s projections.

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