India's growth forecast revised upward to 7.2% by RBI

7 Jun 2024 , 11:11 AM

On June 7, the Reserve Bank of India (RBI) increased its projection for the real gross domestic product (GDP) growth for the financial year 2024-25 to 7.2%, up from the previous estimate of 7%, according to Governor Shaktikanta Das.

Governor Das stated that GDP growth is expected to be 7.3% in the first quarter, 7.2% in the second quarter, 7.3% in the third quarter, and 7.2% in the fourth quarter. If these projections hold, it will mark the fourth consecutive year of growth above 7%.

“Domestic economic activity in FY25 will remain strong,” said Das. “India’s manufacturing PMI is showing strength and is currently the highest globally.” He also mentioned that private consumption is improving, with rural demand getting a boost from agricultural activities. The forecast from the India Meteorological Department is expected to enhance Kharif crop output.

Governor Das noted that while the CPI headline inflation has softened in March and April, food inflation remains high.

The Monetary Policy Committee (MPC) decided on June 7 to keep the repo rate unchanged at 6.5% for the eighth consecutive time, with a majority vote of 4:2. The central bank has maintained its stance on withdrawing accommodation.

“Despite ongoing global challenges, India is experiencing positive growth. However, we must remain alert to new challenges,” said Das.