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).

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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 delivers the Monetary Policy statement, in Mumbai. File photo
| Photo Credit: PTI

 The Reserve Bank of India’s Monetary Policy Committee (MPC) on Wednesday (October 9, 2024) decided to keep the policy repo rate unchanged at 6.50% for the 10th consecutive time.

Of the six members of the MPC, five voted in favour of the decision, which is aimed at taming inflation.

Governor Shaktikanta Das announced the central bank’s decision on policy rates in the RBI’s concluding day Monetary Policy Committee (MPC) meeting on Wednesday. “The Flexible monitory policy framework has completed 8 years. This is major structural reform, “ Mr. Das said in a statement.

The RBI changes stance of monetary policy to ‘neutral’ from withdrawal of accomodation, Mr. Das said. In the backdrop of a good monsoon and adequate buffer stock, the food inflation will fall later in the year, Mr. Das said.

The meeting, which began on October 7, has garnered significant attention, as the RBI has maintained the repo rate at 6.50% for the past nine consecutive meetings, adopting a cautious stance to balance inflationary concerns with the need for economic growth.

Earlier on August 8, 2024, in its first meeting after the Union Budget, the RBI’s Monetary Policy Committee (MPC) kept the policy repo rate unchanged at 6.50% for the ninth consecutive time.

(With inputs from agencies)

The Monetary Policy Committee (MPC) of the Reserve Bank of India on August 10 decided unanimously to keep the policy repo rate unchanged at 6.50%. 
| Photo Credit: The Hindu

The Monetary Policy Committee (MPC) of the Reserve Bank of India on August 10 decided unanimously to keep the policy repo rate unchanged at 6.50%. 

Announcing the bi-monthly monetary policy on Friday, RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) unanimously decided to keep the repo rate unchanged at 6.5 per cent.

The Governor said the real GDP growth for 2023-24 is projected at 6.5%. The latest CPI inflation projection for 2023-24 is at 5.4%, the same as projected previously. Indian forex reserves stood at $586.9 billion as on September 29.

Mr. Das said inflation is likely to ease in September, and the MPC would remain watchful of inflation and remain resolute in aligning inflation to the targeted level. Near-term inflation to soften on lowering of vegetable price and reduction in cooking gas cylinder rate, he added.

Domestic economy exhibits resilience on the back of strong demand, the Governor added.

Private sector capex is gaining ground as suggested by production of capital goods, he said.

The transmission of 250 basis point repo rate cut is still incomplete, the RBI Governor said.

The indications are that food inflation may not see sustained easing in Q3, the Governor added.

RBI may have to consider open market operation with regard to G-secs to manage liquidity, Mr. Das said.

RBI also has decided to double the gold loan under the bullet payment scheme to ₹4 lakh for Urban Cooperative Banks. The Payment Infrastructure Development Fund scheme has been extended by two years to December 2025. Internal Ombudsman Scheme to be further fine-tuned to safeguard the interest of customers, the Governor said.

The government has mandated the RBI to keep CPI inflation at 4 per cent with a margin of 2 per cent on either side.

The Monetary Policy Committee has unanimously decided to keep the policy repo rate unchanged, RBI Governor Shaktikanta Das said in Mumbai on August 10, 2023.
| Photo Credit: Emmanual Yogini

The Monetary Policy Committee (MPC) of the Reserve Bank of India on August 10 decided unanimously to keep the policy repo rate unchanged at 6.50%. 

Consequently, the standing deposit facility (SDF) rate remains at 6.25% and the marginal standing facility (MSF) rate and the Bank Rate at 6.75%. 

The MPC also decided by a majority of 5 out of 6 members to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns with the target, while supporting growth.

Explaining the MPC’s rationale for these decisions on the policy rate and the stance, RBI governor Shaktikanta Das in his statement said, “Headline inflation, after reaching a low of 4.3% in May 2023, rose in June and is expected to surge during July-August led by vegetable prices.”

“While the vegetable price shock may reverse quickly, possible El Niño weather conditions along with global food prices need to be watched closely against the backdrop of a skewed south-west monsoon so far. These developments warrant a heightened vigil on the evolving inflation trajectory,” he said. 

“The cumulative rate hike of 250 basis points undertaken by the MPC is working its way into the economy. Nonetheless, domestic economic activity is holding up well and is likely to retain its momentum, despite weak external demand. Considering this confluence of factors, the MPC decided to remain watchful and evaluate the emerging situation,” he added. 

Consequently, the MPC decided to keep the policy repo rate unchanged at 6.50% with preparedness to act, should the situation so warrant, Mr. Das said. 

He said the MPC remained resolute in its commitment to aligning inflation to the 4 per cent target and anchoring inflation expectations.

Taking all various factors into consideration, the Governor said the real GDP growth for 2023-24 is projected at 6.5% with Q1 at 8.0%; Q2 at 6.5%; Q3 at 6.0%; and Q4 at 5.7%. Real GDP growth for Q1:2024-25 is projected at 6.6%. The risks are evenly balanced.

Given the continuing external uncertainties, the latest CPI inflation projection for 2023-24, assuming a normal monsoon, has been revised to 5.4%, with Q2 at 6.2%, Q3 at 5.7% and Q4 at 5.2%. CPI inflation for Q1:2024-25 is projected at 5.2%. The risks are evenly balanced.

The Governor said considering the difficulties in major economies, the Indian economy is better placed. “India can become the new growth engine of the world,” he said.