The Reserve Bank of India (RBI) has predicted a strong real GDP growth of 7.2% for the fiscal year 2024-25. The central bank also expects Consumer Price Index (CPI) inflation to ease to 4.5% following the recent Monetary Policy Committee (MPC) meeting.
RBI Governor Shaktikanta Das revealed that GDP growth is anticipated to be 7% in the second quarter, with a slight increase to 7.4% in both the third and fourth quarters. For the first quarter of the following financial year (2025-26), growth is projected at 7.3%. The risks are considered balanced across various economic indicators.
Das highlighted that this growth is supported by strong performances each quarter, driven mainly by a rebound in private consumption and rising investments. “Real GDP grew by 6.7 percent in Q1 of FY25, led by a resurgence in private consumption and the highest investment share in GDP since 2012-2013,” he said, although he noted a decline in government spending during that time.
The governor also mentioned that gross value added (GVA) rose by 6.8%, outpacing GDP growth due to solid activity in the industrial and services sectors. Current data indicates stability in domestic economic activities, reinforcing the positive outlook.
On the inflation side, Das projected a slight rise in the third quarter to 4.8%, with further moderation expected in the fourth quarter due to the kharif harvest. However, he warned that agricultural production could be impacted by weather-related issues, which may affect inflation trends.
While the MPC noted that macroeconomic factors for inflation and growth are balanced, Das urged caution regarding the pace of inflation reduction. “Headline inflation is on a downward trajectory, but the pace has been slow and uneven. There may be a reversal in September, keeping inflation elevated in the near term due to adverse base effects and other factors,” he said.
Despite these challenges, there is hope for a decrease in food inflation later in the fiscal year, thanks to strong kharif sowing, sufficient buffer stocks, and favorable soil moisture conditions. Das stated, “Resilient growth allows us to focus on inflation to enable its durable descent to the 4 percent target.”
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