RBI Ups India’s FY25 GDP Forecast to 7.2%, Citing Strong Demand and Monsoon Prospects
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The Reserve Bank of India (RBI) has revised its real GDP growth projection for FY25 upwards, increasing it from 7% to 7.2%. This optimistic outlook is fueled by anticipated improvements in both rural and urban demand, underpinned by favorable monsoon forecasts, as announced by Governor Shaktikanta Das.
Quarterly Growth Projections Upgraded
In addition to the annual forecast, the RBI has also raised its growth expectations for each quarter of FY25. The revised figures are 7.3% for Q1, 7.2% for Q2, 7.3% for Q3, and 7.2% for Q4. This adjustment follows the Monetary Policy Committee's (MPC) April meeting, where they had forecasted 7% growth for the ongoing financial year, cautioning about geopolitical uncertainties.
Manufacturing and Services Sector Performance
The RBI has noted the resilience of domestic economic activity in 2024-25, particularly in manufacturing, which continues to gain ground due to strengthening domestic demand. The eight core industries showed robust growth in April 2024, and the Purchasing Managers Index (PMI) for manufacturing reached its highest level globally in May 2024. Additionally, the services sector has maintained its buoyancy, with the PMI for services standing strong at 60.2 in May 2024, indicating continued robust expansion.
Impressive Growth Trajectory
India's economy grew by 7.8% in the final quarter of FY23 and is estimated to have grown by 8.2% in FY24, according to recent government data. This follows a 7% growth rate in FY23, marking the third consecutive year of 7% or higher growth. Should the RBI’s forecast for FY25 materialize, it would represent a fourth consecutive year of such robust growth.
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Prime Minister’s Remarks
Prime Minister Narendra Modi highlighted the Q4 GDP growth data for 2023-24, noting the strong economic momentum and the hardworking spirit of the Indian people. He emphasized that the 8.2% growth rate for FY24 underscores India’s position as the fastest-growing major economy globally.
Conclusion
Despite global challenges such as the Russia-Ukraine war and the aftermath of the COVID-19 pandemic, India’s economy continues to show remarkable resilience and robust growth. The significant drop in the GDP deflator has played a crucial role in driving real GDP growth, and the continued strength in domestic demand, manufacturing, and services sectors bodes well for the future. With consistent growth rates of 7% or above, India remains on a strong growth trajectory.