RBI projects real GDP growth for 2024-25 at 7.0 per cent

Despite subdued global economic activity and multiple headwinds, the Indian economy expanded impressively, with real GDP growth accelerating to 7.6 per cent from 7.0 per cent in the previous year - the third successive year of 7 per cent or above growth, the RBI highlighted in its annual report released on Thursday.

The Reserve Bank of India (RBI) has projected the real GDP growth for 2024-25 at 7.0 per cent. "Real GDP growth for 2024-25 is projected at 7.0 per cent with risks evenly balanced," the RBI said in its annual report released on Thursday. The projection is cited to enhance activities in real estate, renewable energy, and semiconductors among other sectors.

The RBI added that the traction in construction activity is likely to be sustained and supported by both residential and non-residential real estate demand. Emerging sectors like renewable energy and semiconductors are expected to make rapid advancements with the support of recent initiatives of the government. It also noted that the allocations made in Union Budget 2024-25 for semiconductors and display fabs would contribute in making India a global hub for chip and electronics manufacturing.

"These factors are expected to create new employment opportunities, improve labour incomes and strengthen domestic demand," the central bank added. It also said that investments will come in the sectors where the government has given production-linked incentives (PLI).

"Despite subdued global economic activity and multiple headwinds, the Indian economy expanded impressively, with real GDP growth accelerating to 7.6 per cent from 7.0 per cent in the previous year - the third successive year of 7 per cent or above growth," the RBI highlighted in its the annual statement. Earlier, the S&P Global ratings hiked the outlook for India from stable to positive on Wednesday.

In its recent projections about India's growth, the International Monetary Fund (IMF) anticipated the rate to stay at 6.8 per cent for 2024-25. The RBI further highlighted in its report that the easing of supply chain pressures, broad-based softening in core inflation and early indications of an above-normal southwest monsoon augur well for the inflation outlook in 2024-25.

The central bank also said that it will deploy the appropriate mix of instruments to modulate frictional as well as durable liquidity to ensure that money market interest rates evolve in an orderly manner so that financial stability is preserved. "The central government extended the financial assistance scheme for states' capital expenditure to 2024-25 with an outlay of Rs 1.3 lakh crore. The budgeted reduction in gross market borrowings from 5.3 per cent of GDP in 2023-24 (RE) to 4.3 per cent of GDP in 2024-25 (BE) will enhance the flow of funds to the private sector and support private investment," the Central Bank added in its report.

Recognizing the benefit of digitalization of the tax system, it noted that tax collections have surged. Centre's direct tax revenues budgeted to reach 6.7 per cent of GDP in 2024-25, the highest in three decades. The current account deficit (CAD) is expected to remain manageable in 2024- 25, the central bank said citing the projected rebound in global trade.

It further said that India's share in world remittance receipts is estimated to increase to 15.2 per cent in 2024 from 11.1 per cent in 2019. Despite its crackdowns and notices issued to the banks, NBFCs and fin-tech firms, the RBI claimed that the capital and asset quality of banks and NBFCs is 'healthy.'

The RBI in its report has also warned that several regulatory and supervisory measures will be undertaken in 2024-25 to further strengthen financial intermediaries. (ANI)

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