RBI ups India's GDP growth forecast to 7.2% for FY25
The Reserve Bank of India (RBI) has revised its real gross domestic product (GDP) projection for the fiscal year 2024-25 to 7.2%, a slight increase from the earlier estimate of 7%. This announcement was made by Governor Shaktikanta Das during a press briefing on Friday. He also predicted quarterly GDP growth rates of 7.3% in Q1 and Q3, and 7.2% in Q2 and Q4.
RBI maintains repo rate, highlights economic resilience
The RBI's Monetary Policy Committee (MPC) has decided to keep the repo rate steady at 6.5% for the eighth consecutive time, as announced by Das during the second bi-monthly monetary policy meeting of this fiscal year. The decision was supported by a majority vote of 4:2. Das also stated that "Domestic economic activity in FY25 is expected to remain resilient," with India's manufacturing PMI currently being the highest globally.
Inflation concerns and Kharif output expectations
Despite a decrease in CPI headline inflation in March-April, food inflation remains high, as noted by Das. However, he also mentioned that an expected improvement in Kharif output, as forecasted by the India Meteorological Department, could help mitigate this issue.The RBI has kept its inflation forecast for the fiscal year 2024-2025 at 4.5%. The quarterly breakdown is as follows: Q1 at 4.9%, Q2 at 3.8%, Q3 at 4.6%, and Q4 at 4.5%.
Indian banking system shows resilience and strength
Das highlighted the robustness and resilience of the Indian banking system, which is supported by improved asset quality, increased provisioning for bad loans, sustained capital adequacy, and a rise in profitability. He also noted that non-banking financial companies (NBFCs) have shown strong financials in line with the banking sector. This statement underscores the governor's emphasis on domestic growth-inflation conditions as primary determinants of RBI's actions.
