India's growth story intact: RBI Bulletin estimates 7.2% GDP for 2024-25

Reaffirming the strength of India's economic growth, the Reserve Bank of India's October Bulletin projected real GDP growth at 7.2 percent for the fiscal year 2024-25. In the Bulletin, the RBI highlighted that the momentum in consumption and investment demand continues to fuel growth, with Q2 growth forecast at 7 percent and Q3 and Q4 at 7.4 percent each.

The RBI Bulletin is authored by its editorial committee chaired by Deputy Governor Michael Debabrata Patra. The Central Board of the Bank is not responsible for interpretation and opinions expressed in the articles, the responsibility is that of the author.

"India’s growth story remains intact as its fundamental drivers – consumption and investment demand – are gaining momentum," the Bulletin stated, adding that private consumption, boosted by improved rural demand and a strong agricultural outlook, will play a key role.

Urban demand is also expected to remain resilient, supported by the services sector. The Bulletin further pointed to the government's emphasis on capital expenditure and healthy corporate and bank balance sheets as positive factors bolstering investment activity.

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In the first quarter of FY 2024-25, real GDP grew by 6.7 percent, led by private consumption and a revival in investment, which reached its highest share in GDP since 2012-13. On the supply side, gross value added (GVA) expanded by 6.8 percent, outpacing GDP growth, with strong contributions from industrial and services sectors.

Looking forward, the Bulletin said that sustained growth in agriculture is likely due to favorable weather conditions and improved Kharif sowing, while manufacturing is expected to benefit from lower input costs and supportive policies. High-frequency indicators such as the PMI for manufacturing (56.5 in September) and services (57.7) reflect robust expansion across sectors. The central bank bulletin also noted upward trends in both rural and urban demand, with investment activity benefiting from a rebound in government capital expenditure and private sector optimism.

On inflation, the RBI bulletin noted a sharp decline in headline inflation to 3.6 percent in July and 3.7 percent in August, but cautioned that September could see a rise due to adverse base effects and higher food prices. However, the Bulletin projected CPI inflation for 2024-25 at 4.5 percent, with expectations that food inflation will ease by the end of the fiscal year.

For FY 2025-26, the bulletin projects GDP growth at 7.1 percent, with Q1 growth at 7.3 percent, assuming favorable weather and no significant external shocks. It emphasised that risks to both growth and inflation remain evenly balanced.