The Reserve Bank of India has upheld its forecast for Bharat’s real GDP growth at 7.2 per cent for the fiscal year 2025, despite trimming expectations for the first quarter, according to an announcement by Governor Shaktikanta Das on Thursday.
“Domestic economic activity remains robust. The steady advancement of the southwest monsoon, along with increased Kharif sowing and improved reservoir levels, suggests a positive outlook for Kharif crop production. Manufacturing continues to build momentum, driven by strengthening domestic demand,” Das stated during the Monetary Policy Committee (MPC) meeting, where it was also decided to keep the benchmark rates unchanged at 6.5 per cent.
Although the growth projections for the second, third, and fourth quarters of FY25 were kept steady, the estimate for the first quarter was slightly lowered to 7.1 per cent.
In its June 2024 meeting, the MPC had projected Bharat’s GDP growth at 7.2 per cent for FY25, with quarterly growth rates initially set at 7.3 per cent, 7.2 per cent, 7.3 per cent, and 7.2 per cent. The Indian economy had expanded by 8.2 per cent in FY24.
However, the Economic Survey released in July 2024, ahead of the Union Budget, forecasted a more conservative growth range of 6.5 to 7 per cent for the current fiscal year. This cautious outlook was attributed to global uncertainties and domestic challenges. Major global rating agencies, including the International Monetary Fund and the Asian Development Bank, have similarly pegged India’s growth around 7 per cent.
The Survey noted, “The Survey conservatively projects a real GDP growth of 6.5 to 7 per cent, with risks evenly balanced, considering that market expectations are on the higher side.”
A normal rainfall forecast by the India Meteorological Department and the satisfactory progress of the southwest monsoon so far are anticipated to boost the agricultural sector’s performance and aid the revival of rural demand.
Additionally, the Economic Survey presented an optimistic outlook for Bharat’s financial sector but asserted on the importance of vigilance regarding vulnerabilities. It warned that Bharat must be cautious about over-financialisation at this stage.
