India’s growth story remains strong: RBI projects 7.2% GDP growth for FY25

Consumption and investment demand drive economic optimism

India’s economic outlook remains robust, with the Reserve Bank of India (RBI) projecting real GDP growth of 7.2% for the fiscal year 2024-25. RBI Governor Shaktikanta Das emphasized that the fundamental drivers of the economy—consumption and investment demand—are gaining momentum, positioning India as a bright spot in the global economic landscape.

Das highlighted that private consumption, a cornerstone of aggregate demand, is expected to thrive due to an improved agricultural outlook and rising rural demand. Additionally, sustained growth in the services sector is anticipated to bolster urban demand, while government expenditure is poised to increase in alignment with budget estimates.

“Investment activity will benefit from consumer and business optimism, ongoing government support for capital expenditure, and healthy balance sheets across banks and corporates,” he stated in the RBI’s monthly bulletin.

The RBI’s forecasts break down as follows: real GDP growth for the second quarter is expected at 7.0%, with a rise to 7.4% in both the third and fourth quarters. For the first quarter of the 2025-26 fiscal year, real GDP growth is projected at 7.3%.

While the consumer price index (CPI) inflation for 2024-25 is anticipated at 4.5%, fluctuations are expected due to base effects and increases in food prices, particularly influenced by shortages in key crops like onions and potatoes.

Governor Das reaffirmed that India’s resilient growth provides the opportunity to address inflation, aiming for a sustainable alignment with the 4% target. “We will remain focused on supporting growth while ensuring a durable decrease in inflation,” he noted.

As India continues to navigate its growth trajectory, the Reserve Bank remains committed to flexible liquidity management, ensuring that money market interest rates evolve smoothly, reinforcing India’s position as a dynamic player in the global economy.

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