RBI Forecasts Steady GDP Growth Amid Inflation Concerns

The RBI projects a 7.2% GDP growth for FY25, with inflation moderating at 4.5%. The economic outlook, influenced by robust consumption and investment, remains cautious due to potential weather-related shocks. The focus continues on balancing growth and inflation, with resilient domestic activities providing an optimistic backdrop.

The Reserve Bank of India (RBI) has announced ambitious growth projections for India's GDP, forecasting a 7.2% rise for the financial year 2024-25. Following the Monetary Policy Committee (MPC) meeting, Governor Shaktikanta Das conveyed that real GDP growth for Q1 of 2025-26 is expected to be 7.3%, with evenly balanced risks.

Das attributed this optimistic forecast to robust quarterly performances, though he cautioned that inflation, particularly in the third quarter, is likely to rise slightly to 4.8% before moderating post-kharif harvest. However, the RBI warns that agricultural output remains vulnerable to weather-related disruptions, potentially affecting inflation.

The report highlights a significant uptick in private consumption and investment as key drivers of economic growth, with investment reaching its highest GDP share since 2012-2013. Meanwhile, the supply side witnessed a 6.8% growth in gross value added, underscoring strong industrial and service sector activities. Das emphasized the importance of maintaining steady domestic economic activity while being vigilant about inflation trends in the upcoming months.

(With inputs from agencies.)