The RBI cited the favourable agricultural crop outlook which could ease food inflation pressures, subject to weather risks. File photo
| Photo Credit: REUTERS

The Reserve Bank of India (RBI) has projected India’s real GDP growth for FY25 at 7.2 per cent, while CPI inflation for the fiscal year is expected to moderate to 4.5 per cent, post Monetary Policy Committee (MPC) meeting on Wednesday (October 9, 2024).

Also read:Account verification facility for NEFT, RTGS soon: RBI

Mr. Das said, “Real GDP growth for 2024-25 is projected at 7.2 per cent. With Q2 at 7 per cent, Q3 at 7.4 per cent and Q4 7.4 per cent. Real GDP growth for Q1 of next financial year that is 2025-26 is projected at 7.3 per cent and the risks are evenly balanced.

According to RBI Governor Shaktikanta Das, growth for the fiscal year will be supported by robust quarterly performances.

However, Inflation in the third quarter is forecasted a little higher at 4.8 per cent, with further moderation anticipated in the fourth quarter when the kharif harvest comes.

However, RBI cautioned that the agricultural output remains susceptible to weather-related shocks, which could influence inflationary trends.

In contrast of India’s Gross Domestic Product (GDP) growth for the first quarter of FY25, Mr. Das said, “Real GDP grew by 6.7 per cent in the first quarter of this financial year, that is, 2024-2025, and this was led by a revival in private consumption and improvement in investment. The share of investment in GDP reached its highest level since 2012-2013. Government expenditure, on the other hand, contracted during the first quarter.”

“On the supply side, gross value added, that is, GVA, expanded by 6.8 per cent, surpassing the GDP growth, aided by strong industrial and services sector activities. High-frequency indicators available so far suggest that domestic economic activity continues to be steady,” Mr. Das added.

On the liquidity front, surplus conditions prevailed in August, September, and early October, though liquidity levels shifted back in late September. However, the agriculture and services sectors remained strong, and government consumption showed signs of improvement. Private investment intentions are also improving, reflecting growing confidence in the economy. Mr. Das said, “MPC noted that currently, the macroeconomic parameters of inflation and growth are well balanced.

Reserve Bank of India (RBI) Governor Shaktikanta Das. File
| Photo Credit: Reuters

The Reserve Bank of India (RBI) Governor Shaktikanta Das on Thursday (August 8) announced the bi-monthly monetary policy statement, keeping the repo rate, which is the central bank’s rate for short-term loans to banks, unchanged at 6.5%.

In the Monetary Policy Committee (MPC) meeting, majority members voted to hold the rates. Four voted in favour and two against. Following the policy announcement, Mr. Das will hold a press conference at 12 p.m. on Thursday, which will be streamed live on the RBI’s X handle.

Also read | Policy repo rate unchanged at 6.5%; real GDP growth for FY25 projected at 7%

India’s GDP growth estimates and inflation forecast will be key to watch out for in the RBI policy on Thursday.

Inflation continues to be a significant factor influencing the RBI’s monetary policy stance. Despite core inflation being contained and a noticeable 15-20% drop in commodity prices, especially metals, from their 2024 peak, food inflation remains problematic. Experts emphasize that inflation in India still exceeds the RBI’s target range, making it unlikely for the central bank to cut rates until inflation aligns with the 4% target.