The Reserve Bank of India (RBI) announced on Thursday a projection of 7 per cent GDP growth for the financial year 2024-25, slightly lower than the estimated 7.30 per cent expansion for the current fiscal year.
In the bi-monthly monetary policy announcement, RBI Governor Shaktikanta Das highlighted that rural demand is gaining momentum, urban consumption remains robust, and the investment cycle is picking up pace due to increased capital expenditure. He also noted signs of a revival in private investments.
"On the inflation front, large and repetitive food price shocks are interrupting the pace of disinflation that is led by the moderation of core inflation. Geopolitical events and their impact on supply chains, and volatility in international financial markets and commodity prices are key sources of upside risks to inflation. The cumulative effect of policy repo rate increases is still working its way through the economy," he said
The real GDP growth for the fiscal year 2024-25 is forecast at 7 per cent, with growth rates of 7.20 per cent and 6.8 per cent expected in the June and September quarters, respectively. Growth in the December and March quarters is projected at 7 per cent and 6.90 per cent, respectively.
Governor Das remarked that domestic economic activity remains robust, and the growth rate for the current fiscal year, as estimated by the National Statistical Office (NSO), stands at 7.30 per cent. He expressed confidence that the momentum witnessed in the fiscal year 2023-24 is expected to continue into the next fiscal year, 2024-25.
"The momentum of 2023-24 is expected to continue in 2024-25 fiscal," Das said.
During the announcement of the bi-monthly monetary policy, RBI Governor Shaktikanta Das emphasised the Monetary Policy Committee's (MPC) vigilance regarding food inflation to safeguard the gains achieved. Notably, this policy review follows the presentation of the Interim Budget 2024-25 last week.
In December, Consumer Price Index (CPI) inflation surged to a four-month high of 5.69 per cent. This uptick was attributed to elevated prices of various food items, including pulses, spices, fruits, and vegetables. In comparison, CPI inflation stood at 5.55 per cent in November 2023.
While recent inflationary trends have remained within the government's prescribed range of 2-6 per cent for the RBI, they still surpass the central bank's target of 4 per cent.
The RBI's projections for CPI inflation are set at 5.40 per cent for the fiscal year 2023-24 (FY24) and 5.60 per cent for 2024-25, indicating cautious expectations regarding inflationary pressures in the near term.
(With PTI inputs)
