RBI MPC Meeting: RBI pegged India’s real GDP growth for FY25 at 7%

RBI Growth Forecast: Reserve Bank of India has kept repo rate unchanged at 6.5 per cent and projected GDP growth for FY25 at 7 per cent on Friday. Beating all expectations, RBI governor Shaktikanta Das kept growth forecast unchanged at 7 per cent, as Street was expecting an upward revision of growth forecasts in backdrop of more than expected and estimated growth witnessed by Indian economy in Q2 and Q3 of FY24.

“As per second vance estimates (SAE), real gross domestic product (GDP) expanded at 7.6 per cent in 2023-24 on back of buoyant domestic demand. Real GDP increased by 8.4 per cent in Q3, with strong investment activity and a lower drag from net external,” RBI governor Shaktikanta Das said.  

According to Das, an expected normal south-west monsoon should support agricultural activity. Manufacturing is expected to maintain its momentum on back of sustained profitability. Services activity is likely to grow above pre-pandemic trend. 

Quarterly Growth Forecasts

“ prospects of fixed investment remain bright with business optimism, healthy corporate and bank balance sheets, robust government capital expenditure and signs of an upturn in private capex cycle,” Das ded.  Hewinds from geopolitical tensions, volatility in international financial markets, geoeconomic fragmentation, rising Red Sea disruptions, and extreme wear events, however, pose risks to outlook. 

Taking all se factors into consideration, apex bank pegged real GDP growth for 2024-25 in Q1 at 7.1 per cent, Q2 at 6.9 per cent, Q3 at 7.0 per cent, and Q4 at 7.0 per cent. 

What has changed?

As far as full-year growth forecast is concerned, RBI has kept it unchanged at 7 per cent. However, downward revision has been me by apex bank in Q1 of FY25 at 7.1 per cent, which was earlier projected to be at 7.2 per cent. Similarly, RBI me an upward revision to growth forecast in Q2 at 6.9 per cent from 6.8 per cent projected earlier. For Q3, growth forecast is kept unchanged, and for Q4, RBI has raised GDP growth target to 7 per cent from earlier projected GDP growth of 6.9 per cent.